Limited Company Director Mortgages: The Complete Guide

If you are a director of a limited company, getting a mortgage can be more complex than it is for salaried employees. The way you pay yourself — typically a low salary combined with dividends — is tax-efficient but can work against you when lenders assess your income. The good news is that not all lenders assess directors the same way. Some will look beyond what you have personally extracted from the company and consider your share of the business's net profit, which can dramatically increase your borrowing capacity. This guide explains how it all works and how to find the right lender for your situation.

For a broader overview of self employed mortgage options, see our complete guide to self employed mortgages.

How do lenders assess income for limited company directors?

Lenders assess director income in two main ways: salary plus dividends (most common) or salary plus share of net profit (more favourable). The method used can mean the difference between borrowing £214,000 and £596,500 on the same income. Different lenders take different approaches:

What is the salary plus dividends assessment?

Most high street lenders assess a director's income as the total of their PAYE salary plus dividends declared on their SA302 tax calculation. This often produces a low figure because directors deliberately keep personal extraction low to minimise their tax liability.

For example, a director paying themselves £12,570 salary (the personal allowance) and £35,000 in dividends would be assessed on an income of £47,570. At 4.5 times income, this would allow borrowing of approximately £214,000.

What is the salary plus net profit assessment and why is it better?

The salary plus net profit assessment uses your salary plus your share of the company's net profit before corporation tax, which can double or triple your borrowing compared to salary plus dividends. A smaller but growing number of lenders offer this approach because it captures the full earning capacity of the business, regardless of how much you have actually extracted.

Using the same example: if the director's company has a net profit of £120,000 and the director owns 100% of the shares, the assessed income would be £12,570 salary plus £120,000 profit = £132,570. At 4.5 times income, this allows borrowing of approximately £596,500 — nearly three times more than the salary plus dividends approach.

What documents do company directors need for a mortgage?

You will need two to three years of SA302s, company accounts, personal and business bank statements, and proof of shareholding. Director applications typically require more documentation than standard employed applications:

1. 01

   SA302 tax calculations and tax year overviews (2–3 years)

   These show your personal income as declared to HMRC, including salary and dividends. Download them from your HMRC online account. Most lenders require at least two years.

2. 02

   Company accounts (2–3 years)

   Full statutory accounts prepared by a qualified accountant (ACCA, ACA, or ICAEW certified). These must show the company’s profit and loss, balance sheet, and your salary and dividends. Lenders using net profit assessment will pay close attention to the profit figures.

3. 03

   Company bank statements (3–6 months)

   Business bank statements help lenders verify the company’s income and expenditure and confirm the figures in the accounts are consistent with actual cash flow.

4. 04

   Personal bank statements (3–6 months)

   These show your personal income, spending patterns, and any financial commitments. Lenders use them for affordability assessment alongside the income evidence.

5. 05

   Accountant’s reference or certificate

   Some lenders request a reference from your accountant confirming your income, the company’s trading status, and projected earnings. This is more common with specialist lenders.

6. 06

   Proof of shareholding

   If you are not the sole director and shareholder, lenders will need to understand your ownership percentage to calculate your share of the company’s profits. A confirmation statement from Companies House or your accountant will suffice.

Do retained profits count towards your mortgage borrowing?

Retained profits can count towards your mortgage borrowing if you find a lender that uses the salary plus net profit assessment method. Many directors retain a significant portion of their company's profits within the business rather than extracting them as dividends, which is tax-efficient but creates a disconnect between your company's actual earnings and the income you personally declare on your tax return.

Lenders that only consider salary plus dividends effectively penalise directors who retain profits. If your company earned £150,000 profit but you only took £50,000 in dividends, most lenders would ignore the £100,000 left in the company.

This is where the salary plus net profit approach becomes so valuable. Lenders using this method look at the company's total profitability and your share of it, giving you credit for the full earning power of your business. This can be especially significant if you have been building up retained profits over several years to fund business growth, a property deposit, or other plans.

Can you get a mortgage with multiple directorships or mixed income?

Yes, though the application becomes more complex. Some lenders will combine income from multiple directorships, and most will consider both PAYE employment and directorship income together. Key considerations include:

• Multiple companies: Some lenders will combine income from multiple directorships, while others will only consider your primary company. A broker can identify which lenders take the more flexible approach.
• Mixed employment and self employment: If you have both PAYE employment and a directorship, most lenders will consider both income sources. The PAYE income is usually straightforward; the directorship income follows the assessment methods described above.
• Recently incorporated: If you recently converted from sole trader to limited company, some lenders will accept your sole trader trading history as evidence of track record, even though the limited company itself is new. This can be crucial if your company is less than two years old.
• Minority shareholding: If you own less than 25% of the company, most lenders will not treat you as self employed and may assess you based on your PAYE income from the company only. If you own between 25% and 100%, your share of net profit will be calculated proportionally.

How can company directors maximise their mortgage borrowing?

• Find a lender that uses net profit: This is the most impactful thing you can do. A specialist broker will know which lenders offer this assessment and how to present your accounts to them.
• File your accounts promptly: Having your latest year's accounts available gives lenders the most current picture of your company's performance. Delays in filing can mean lenders use older, potentially less favourable figures.
• Talk to your accountant early: Let your accountant know you are planning a mortgage application. They can advise on timing and how to structure your accounts presentation, and they may need to prepare an accountant's certificate.
• Keep your company finances healthy: Lenders look at the overall health of your business, not just the profit figure. A strong balance sheet, consistent revenue, and manageable liabilities all contribute to a positive assessment.
• Consider your dividend strategy: If you are planning to apply with a lender that uses salary plus dividends (perhaps because they offer the best rate for your LTV), it may be worth extracting higher dividends in the year before your application, though this should be balanced against the tax implications.

If you also contract for clients, the assessment methods may differ. Read our guide to contractor mortgages for detail on day rate assessments. For an estimate of how much you could borrow, see our guide on self employed borrowing capacity or try our affordability calculator.