How to get the maximum mortgage when your self employed

Published 5 October 2016 · Last reviewed 25 February 2017 · Older article — see current rates

Maximum mortgage solutions for Self Employed clients

If you are self employed operating as a Limited company we have a number of lenders that will use the underlying net profit rather than drawn dividends. So if you are keeping money in the business you will be able to borrow more. With almost 82% of new business going via brokers its always worth talking to an independent broker that deals with self employed applicants to find you the very best solution.

Example from a lender working from salary and dividends

Average dividends over past 2 years £30,000

Average salary over past 2 years £10,000

Total income to be assessed £40,000

Typical income multiple x 4.5

Max loan with lender on salary/dividends £180,000

Same example using Underlying net profit

Average Profit Before Tax over 2 years £45,000

Average Salary over 2 years £10,000

Total income to be assessed £55,000

Income multiples x 4.5

Max loan with Niche Advice £247,500

If you’re self-employed or running a limited company, the size of mortgage you can secure depends as much on which lender you approach as on your actual income. Mainstream lenders typically calculate affordability using salary plus drawn dividends — which can drastically understate the borrowing power of company directors who deliberately retain profits in the business for tax efficiency. Specialist lenders look more broadly at net profit, accountant references, and forward trading projections.

Our team at Niche Advice works with self-employed applicants across all structures — limited company directors, sole traders, contractors on a day rate, and partnerships. The case for using a broker is strongest where your income looks complicated on paper but is straightforward in reality: an experienced broker knows which lenders’ affordability criteria match your specific income picture, and which mainstream offers will leave money on the table. The questions below cover the most common situations we see — for anything specific to your circumstances, get in touch.

Self-employed mortgages — frequently asked questions

Straight answers from the self-employed mortgage specialists.

What’s the difference between salary, dividends and retained profit in mortgage assessments?

Most mainstream lenders calculate affordability using salary plus drawn dividends only — the income you have personally received. Specialist lenders look more broadly: a smaller group will accept “underlying net profit” (the company’s profit before drawings), which can be significantly higher than salary plus dividends if you intentionally retain earnings in the business.

Why do some lenders only count salary + dividends and ignore retained profit?

Salary and dividends are personally received and easily evidenced via SA302s and tax overviews. Retained profits sit inside the company and require additional analysis — accountant references, full company accounts, and sometimes a meeting with an underwriter. Lenders set up for high-volume automated decisioning often don’t have the underwriting capacity to assess the wider picture, so they default to the simpler measure.

How many years of accounts do I usually need as a self-employed director?

Most mainstream lenders ask for two or three years of accounts to assess income trend. Some specialist lenders accept one year of full accounts, particularly where the business profile or sector supports the case. The specific document set typically includes SA302 forms, tax year overviews, and full company accounts.

Can I get a mortgage if I’ve only been self-employed for one year?

Yes, in many cases. A small group of specialist lenders accept one full year of accounts plus an accountant’s projection, particularly where the income is steady, the sector is reputable, and the deposit is reasonable. The product range is narrower than for two or three years’ history, but it is workable.

What documents do specialist self-employed lenders typically ask for?

Typical document set: latest two years of SA302 + tax year overview, full company accounts (usually two to three years), an accountant’s certificate confirming year-to-date trading performance, three months of personal bank statements, and three months of business bank statements. Specialist lenders may additionally request the latest set of management accounts.

Will my mortgage offer be smaller if I keep money in my company rather than draw it?

With most mainstream lenders, yes — they assess income on what you have drawn, not what the company earned. With specialist lenders that include retained profit in the affordability calculation, the offer is generally larger because the assessable income is higher. This is why the choice of lender matters as much as the rate, particularly for limited company directors who deliberately retain profits for tax efficiency.

Initial enquiry · No obligation

Speak to a specialist mortgage adviser today.

Independent UK specialist mortgage broker. Free initial review — your enquiry will not affect your credit file.

Whole of Market. FCA-regulated independent advice — specialist mortgage broking since 2008.
Specialists in complex cases. Self-employed, visa applicants, foreign nationals, adverse credit and bridging.
Call-back from a qualified adviser. We’ll get back to you as soon as we can during working hours.

4.8/5 on Google 130+ reviews

Payam Azadi Director – Specialist Finance Expert

Initial enquiry · No obligation Speak to an adviser

Free initial review · No obligation

How to get the maximum mortgage when your self employed

Maximum mortgage solutions for Self Employed clients

Example from a lender working from salary and dividends

Same example using Underlying net profit