You run a limited company. You draw a modest salary and take the rest of your income as dividends. You have retained profits sitting in the business. On paper, your company is doing well.
And then you apply for a mortgage and a high-street lender tells you that you can only borrow based on your salary. The dividends do not count. The retained profits are invisible. The offer comes back at a fraction of what you can actually afford.
This is one of the most common and most avoidable problems in the self-employed mortgage market. It is not a reflection of your financial position. It is a reflection of which lender your application reached.
This guide explains how specialist lenders assess company directors, what they look at beyond salary, and how to approach the application in a way that reflects your actual income.
Why high-street lenders get this wrong
Most high-street lenders are set up to process standard applications at volume. Their affordability models are built around PAYE income, and when a director comes along with a salary of £12,570 and dividends of £80,000, the model sees a salary of £12,570.
The dividends may be acknowledged, but many lenders treat them as variable or unreliable income and either exclude them or apply a significant haircut. The result is a borrowing figure that bears no relationship to what the director can actually afford.
A specialist lender takes a completely different approach. They look at the full picture of a director's income and apply methodologies designed for exactly this situation.
How specialist lenders assess director income
There is no single standard approach. Different specialist lenders use different methodologies, and the right one for your situation depends on how your company is structured, how you draw your income, and what your accounts look like.
Salary plus dividends
The most straightforward specialist approach is to add your salary and dividends together to produce a total income figure. This alone produces a significantly better result than salary-only assessment. Most specialist lenders and a growing number of mainstream lenders will take this approach, provided your dividends are consistent and well-documented.
Net profit before or after tax
Some lenders go further and look at the company's net profit rather than just what you have drawn. This is particularly useful where a director has chosen to leave funds in the business rather than draw them as income. The lender treats the company's profitability as a proxy for your available income, which can produce a substantially higher assessable income figure.
Some lenders use net profit before tax, others use net profit after tax. The difference can be material. Knowing which lender uses which approach, and how your accounts present the relevant figures, is a significant part of getting the best outcome.
Allowable expense add-backs
Many specialist lenders will also add back certain allowable expenses that appear in your company accounts. These are legitimate business costs that reduce your declared profit for tax purposes but do not represent a real reduction in your financial position.
Common add-backs include depreciation, amortisation, and some one-off or non-recurring costs. The specific expenses a lender will add back vary between lenders, and this is an area where the way your accounts are prepared can make a meaningful difference to how much you are able to borrow. This is worth discussing with your accountant well before you apply.
Retained profits
Where a director has built up significant retained profits in the company, some lenders will take these into account as part of the income assessment. This is not universal, and the approach varies considerably. But for directors with profitable companies who have reinvested rather than drawn income, it can open up borrowing options that a salary-and-dividends assessment alone would not.
The year-one director challenge
One of the most common questions we receive from directors is what happens when the company has only been trading for a year or less. Most lenders require two years of finalised accounts. Some will consider one year of accounts in the right circumstances.
Where a director has recently incorporated but has a strong employment history in the same sector, some specialist lenders will take a more flexible view. The key is being able to demonstrate continuity of activity and income, even if the legal structure has changed.
If your company has been trading for less than two years, this is absolutely worth exploring with a specialist rather than assuming it is not possible.
Multiple directorships
Some directors hold positions in more than one company and draw income from multiple sources. This adds a layer of complexity but is not a barrier. Specialist lenders are familiar with this situation and will typically look at the income from each company separately, assessing the accounts and income profile of each.
Where one company is profitable and another is at an earlier stage, a specialist broker can help you understand how to present the combined picture in the most favourable way.
The role of your accountant
How your accounts are prepared directly affects your mortgage options. This is not about misrepresenting your finances. It is about ensuring that your accounts present your income clearly and in a way that a lender can assess properly.
For example, if your accountant maximises legitimate business expenses to reduce your tax liability, this will also reduce your declared profit. For tax purposes, this is sensible. For mortgage purposes, it can produce a lower assessable income than your actual financial position warrants. There is a balance to find, and it is worth discussing this with your accountant in the context of a planned mortgage application.
We are not accountants and this is not tax advice. But we work with directors on this question regularly and can help you understand what lenders are looking for before you sit down with your accountant.
What documentation you will need
The exact requirements vary by lender, but for most director mortgage applications you will need two years of finalised company accounts, two years of SA302 documents and tax year overviews, your most recent three months of personal bank statements, and your most recent three months of business bank statements. Some lenders will also want your accountant's certificate confirming your income.
If your most recent year's accounts are not yet finalised, this will affect your options. It is worth timing your application with your accounting year in mind where possible.
Frequently asked questions
What if my salary is low and dividends are high?
This is exactly the situation where a specialist lender makes the most difference. A high-street lender will see the low salary and lend accordingly. A specialist lender will assess the full salary-plus-dividends figure, and potentially the net profit of the company too.
Can I use retained profits in my company as part of my income?
Some specialist lenders will include retained profits in the income assessment. Not all will, and the criteria vary. This is worth raising specifically with a specialist broker if retained profits are a significant part of your financial picture.
I have only just set up my company. Can I still get a mortgage?
Most lenders require two years of accounts, but some will consider one year in the right circumstances. If you have a strong employment history in the same field and clean accounts for the period you have been trading, it is worth exploring rather than assuming the answer is no.
What accounts do lenders actually need?
Most lenders require two years of finalised, accountant-prepared accounts. Management accounts or draft figures are typically not accepted. The accounts should be signed off by a qualified accountant.
Do different lenders assess this differently?
Yes, significantly. The same financial position can produce very different borrowing figures depending on which lender's methodology is applied. A specialist broker knows which lenders are most likely to give you the best outcome for your specific situation.
Last updated: 10 May 2026