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Self-employed mortgages
Getting a mortgage as a company director means lenders look past your payslip and dig into your salary, dividends, and retained profits. Here's how they assess you, and how to borrow more.
A company director mortgage isn't a distinct mortgage product - it's a standard residential mortgage assessed differently because of how directors are paid. Before working out how much you can borrow, a lender first decides whether to treat you as employed or self-employed.
Lenders then calculate your income in one of three ways: salary plus dividends (the most common method, using only what you've withdrawn), salary plus net profit after corporation tax (including your share of retained profit), or salary plus pre-tax profit (used by a smaller number of specialist lenders). The method a lender uses can make a substantial difference to your borrowing capacity, particularly if you keep dividends low for tax efficiency and retain profit in the business.
Most lenders will lend around 4 to 4.5 times your assessed income, with some offering 5 to 6 times for higher earners. You'll typically need 2-3 years of company accounts, SA302 tax calculations, and tax year overviews, though some specialist lenders accept as little as one year's trading history.
A company director mortgage isn't a special type of mortgage product - it's a standard residential mortgage assessed differently because of how directors receive their income. When you apply for a mortgage as a limited company director, lenders focus closely on how your income is structured and what documentation you can provide to prove your earnings.
If you're employed by someone else, proving your income is straightforward: you provide payslips and a P60, and the lender can see exactly what you earn each month. As a company director, your income picture is more complex. You might draw a modest salary to minimise National Insurance contributions, top it up with dividends, and leave the remaining profit in the business.
This tax-efficient approach makes sense for your finances, but it can create challenges when you apply for a mortgage. The income shown on your SA302 tax calculation might be far lower than your business's actual profitability, and therefore lower than your true earning capacity.
Key point: there's no such thing as a dedicated "company director mortgage product". What differs is how lenders assess your income and which documents they need to verify it. Company directors use the same standard mortgage products as any other applicant.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Before a lender calculates how much you can borrow, they first decide whether to treat you as employed or self-employed. This classification has a significant effect on your application. Many lenders are willing to offer mortgages to limited company directors, but typically assess them in a similar way to other self-employed applicants.
Most lenders use a 25% shareholding threshold to make this decision:
Some lenders use different thresholds - one high street bank uses 20%, and at least one mainstream lender uses just 10%. This matters because being classified as employed can sometimes work in your favour, particularly if your salary alone is substantial.
If you're applying jointly with a business partner and you both own shares, some lenders add your shareholdings together. For example, if you each own 15% of the company, your combined 30% shareholding would classify you both as self-employed under most lenders' criteria.
If you're treated as employed:
If you're treated as self-employed:
This is where the right lender choice can make a dramatic difference to how much you can borrow. Lenders use one of three main methods to calculate a company director's income.
Most high street lenders use this approach. They add your director's salary to the dividends you've actually withdrawn from the company, typically averaging the last two years.
Example: a director's salary of £12,570 plus dividends of £37,500 gives a total assessed income of £50,070. Using a 4.5x income multiple, that supports a maximum mortgage of approximately £225,000.
The limitation: if you've deliberately kept dividends low for tax efficiency, your borrowing capacity is capped, regardless of how profitable your business actually is.
Some lenders will consider your salary plus your share of the company's net profit after corporation tax has been paid, regardless of whether you've withdrawn it as dividends.
Example (same director, same company): a salary of £12,570 plus a share of net profit after tax of £77,430 gives a total assessed income of £90,000. Using a 4.5x multiple, that's a maximum mortgage of approximately £405,000, nearly double the salary-plus-dividends result.
A smaller number of specialist lenders will consider your share of pre-tax profits. These lenders tend to charge somewhat higher rates, but the increased borrowing capacity can be significant.
Example (same director, same company): a salary of £12,570 plus a share of pre-tax net profit of £100,000 gives a total assessed income of £112,570. Using a 4.5x multiple, that's a maximum mortgage of approximately £506,565.
The best method depends on your circumstances.
If your company retains profit rather than paying it all out as dividends, ask your advisor whether a net profit lender could work for you. It's often the single biggest factor in how much you can borrow.
The amount you can borrow depends on your income, calculated using one of the methods above, multiplied by the lender's income multiple. Lenders typically average your most recent two to three years of salary and dividend payments to reach this figure.
Most lenders offer company directors between 4 and 4.5 times their annual income.
Some lenders offer enhanced income multiples of 5 to 6 times income for company directors earning above certain thresholds, often £75,000 or £100,000 a year.
Sarah is a 100% shareholder in a marketing consultancy. She takes a director's salary of £12,570 a year and dividends of £40,000 a year, and her company makes a net profit after corporation tax of £85,000 a year - she retains £32,430 of that in the company.
The difference is over £250,000 in borrowing capacity, simply by choosing a lender that fits Sarah's circumstances. These figures are illustrative - speak to an advisor to find out what's realistic for your income and circumstances.
Deposit requirements for company directors are typically no different from those for employed applicants.
Some lenders will accept a deposit sourced from retained profits in your company. You'll typically need your accountant to confirm in writing that withdrawing this money won't negatively affect the business's financial health.
How long you've been trading significantly affects your options. Most lenders want to see at least two or three years of trading history, but some will consider less.
Trading history
Gathering the right documents before you apply speeds up the process significantly. Lenders will closely review your business accounts, as these give a clear picture of your company's trading history and financial health. Here's what most lenders require if you have a 25%+ shareholding.
An SA302 is your tax calculation document from HMRC. It shows your total income, tax paid, and National Insurance contributions for a specific tax year. Self-employed people and company directors need this document for mortgage applications.
How to get your SA302:
Most lenders also require your tax year overview alongside the SA302. This separate document verifies the figures are correct and shows any outstanding tax.
Many lenders specify that your accounts must be prepared by a qualified accountant from a recognised body, such as:
If your accountant isn't appropriately qualified, some lenders won't accept your application, so check this early.
Before you apply, check that your SA302 figures and your company accounts tell the same story. Lenders spot inconsistencies quickly, and they can slow your application down or lead to a decline.
Company director mortgages
An advisor can tell you exactly what you'll need before you start pulling together accounts and SA302s, and compare a wide range of lenders on your behalf.
Here's what to expect when you apply for a company director mortgage. The process can take longer than an employed application because more documentation needs to be verified, so it's worth knowing what's coming.
How it works
Preparation (4-6 weeks before applying)
Gather your company accounts, SA302 tax calculations, and tax year overviews. Check your credit report for errors, and calculate your income using both the salary-plus-dividends and salary-plus-net-profit methods.
Broker consultation
A specialist advisor reviews your documents and income structure, identifies which lenders suit your circumstances, and gives you an indication of how much you could borrow.
Agreement in principle (1-3 days)
Your advisor submits an agreement in principle application. This involves a soft credit check and gives a preliminary indication that a lender would consider your application, subject to full verification.
Full mortgage application
Once your offer on a property is accepted, you submit full documentation, a property valuation is arranged, and an underwriter reviews your income, affordability, and credit history.
Mortgage offer (2-4 weeks typically)
If everything checks out, you'll receive a formal mortgage offer - the lender's binding commitment to lend.
Completion
Your solicitor handles the legal work. Once complete, the mortgage funds are released and you take ownership of the property. Allow 8-12 weeks in total from application to completion, sometimes longer for complex cases.
If you're concerned your borrowing capacity might be limited, these strategies can help. Fluctuating income is a common concern for company directors, especially if your earnings or business profits have varied year to year - if your income has continuously declined, most lenders will only consider your most recent year's figures.
Boost your borrowing
The same mistakes trip up company directors again and again. Submitting clear, comprehensive documentation upfront helps your application move faster and reduces the risk of delays or a decline.
High street banks have their place, but if your income structure involves significant retained profits, they may not be your best option. A lender who only considers salary plus dividends will always offer you less than one who considers net profit.
Your SA302 and accounts need to be filed before you can apply. If you've delayed your tax return, you're delaying your mortgage too. Plan 6-12 months ahead where possible.
Lenders value stability. Try to avoid these changes in the 12 months before applying:
If your SA302 shows different figures from your company accounts, lenders get concerned. Make sure all your documentation tells a consistent story about your income.
If your income dropped in one year, perhaps due to investment in the business or extended leave, provide context. An unexplained 30% drop in profits raises questions; an explained one is usually acceptable.
Company director applications typically take longer than employed applications because more documentation needs to be verified. Allow 4-8 weeks from application to offer, sometimes longer for complex cases.
If you're a director of more than one company, lenders will typically consider income from all businesses where you have a significant shareholding. You'll need to provide separate accounts and documentation for each company, and the assessment can become complex.
If you've recently converted from sole trader to limited company for tax reasons, some lenders will consider your sole trader history alongside your limited company accounts. This can help if your limited company has less than two years' trading history.
What you'll need:
If you're mid-way through incorporating from sole trader to limited company, talk to a specialist advisor early. Some lenders will count your sole trader history, but you'll need to evidence continuity clearly.
Past credit problems don't automatically disqualify you, but they do limit your options and typically require a larger deposit.
Specialist lenders exist for directors with credit challenges. Rates will be higher, but homeownership remains achievable. If you're worried about your options because of debt or credit issues, MoneyHelper (moneyhelper.org.uk, 0800 138 7777) offers free, independent guidance.
If you're purchasing an investment property, you have two main options:
Many experienced landlords now use limited company structures for tax efficiency. Read our buy to let mortgage guide for more detail, and discuss this with both your accountant and mortgage advisor.
For company directors, working with a broker who understands self-employed income is particularly valuable. The complexity of director income often means a specialist broker can help you find the best lender match for your circumstances.
If you're a company director looking to get a mortgage, here's your action plan. Gathering the right documents and financial records before you apply means your advisor can move things forward faster.
Common questions
Yes, though your options are more limited. Some specialist lenders accept applications with just one year's filed accounts, particularly if you have a strong deposit (15%+), good credit history, and can demonstrate stable ongoing income. If you previously traded as a sole trader in the same field, some lenders will also count that history.
Not necessarily. While increasing your dividend payment will boost your assessed income with lenders who only consider salary plus dividends, there's another option. Some lenders assess your salary plus share of net profit, meaning they consider the profit your business generated, regardless of whether you withdrew it. This approach can be more tax-efficient.
No. Your interest rate depends on your deposit size, credit history, and the product you choose, not your employment status. A self-employed borrower with a strong deposit and good credit will access the same rates as an employed borrower in the same position.
Most lenders want to see two to three years of accounts. Some will accept one year for straightforward applications. If your income has fluctuated significantly, lenders may look at the longer period to establish an average. If your most recent year shows much higher income, some lenders will use just that year, potentially increasing your borrowing capacity.
A historic loss isn't automatically disqualifying. If the loss was two or three years ago and you've since returned to profitability, most lenders will consider your application. A loss in the most recent year is more problematic, though if the loss resulted from increased salary or dividend payments to yourself, specialist lenders may still help.
Yes, some lenders accept deposits sourced from company retained profits. You'll typically need your accountant to confirm in writing that withdrawing this amount won't negatively impact the business. The money should be transferred to your personal account before completion, and you'll need to evidence the source clearly.
Your shareholding affects two things: how you're classified (employed vs self-employed), and what share of company profits is attributed to you. If you own 50% of the company, lenders will typically only consider 50% of the net profit as your income. If you own 100%, they'll consider 100%.
Lenders verify your income through multiple documents: SA302 tax calculations from HMRC show what you've declared, while company accounts show business profitability. These should be consistent. Some lenders also check Companies House filings and may ask for bank statements to verify the income pattern.
Yes, though applications become more complex. Lenders will typically consider income from all companies where you have a significant shareholding. You'll need to provide separate accounts and SA302s for each. Be prepared for additional questions about how the businesses relate to each other.
Salary plus dividends only considers money you've actually withdrawn from the company. Salary plus net profit considers your share of what the company earned, whether you withdrew it or not. For directors who retain profits in their business for tax efficiency, the net profit method typically results in significantly higher borrowing capacity.
Expect 4-8 weeks from full application to mortgage offer, sometimes longer for complex cases. The additional documentation required, such as accounts, SA302s, and accountant verification, means company director applications typically take longer than employed applications. Allow 8-12 weeks in total from application to completion.
Yes, though your options are more limited and you'll likely need a larger deposit, typically 15-25%. Specialist lenders exist specifically for self-employed borrowers with credit challenges. The impact depends on what happened, when it happened, and how you've managed credit since. A specialist advisor can assess your specific situation.
It depends on your circumstances. High street banks work well if you have two or more years' accounts, withdraw most of your profits as salary and dividends, and have straightforward documentation. Specialist lenders are often better if you retain significant profits, have a shorter trading history, or have any complexities in your application. A broker can advise which route suits you best.
Try to avoid making significant changes to your business structure during the mortgage application process. Lenders assess your application based on the documentation provided - if your circumstances change materially, they may need to reassess or could potentially withdraw the offer. If you're planning restructuring, complete it well before applying or delay until after completion.
Some specialist lenders will consider accountant projections for the current financial year, particularly if you have a strong track record and the projection is well-evidenced, for example with signed contracts or a consistent growth history. However, most mainstream lenders assess income based on historical figures only.
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