Learn more about contractor mortgages in our detailed guide.

Can I use retained profits for a mortgage as a director?

Yes, some lenders will consider your share of retained company profits rather than just salary and dividends. This can significantly increase your borrowing power if you leave profits in the business. You typically need 20-25% shareholding for this approach.

Do I need 2 years of accounts as a company director?

Most lenders require 2 years of trading accounts, but some specialist lenders accept 1 year with strong evidence of income stability. Your industry experience and the type of business can also be factors in their decision.

Which income method gives higher borrowing for directors?

Net profit before tax typically gives higher borrowing than salary plus dividends if you retain profits in the company. A specialist broker can calculate your borrowing potential using both methods to find the best approach for your situation.

What documents do company directors need for a mortgage?

Directors typically need SA302 tax calculations, company accounts prepared by an accountant, bank statements, tax year overviews, and possibly a projection letter from your accountant if income is growing.

Quick Answer

How Do Lenders Calculate Income from Dividends for a Mortgage?

Last reviewed: December 2025

Reviewed by Jay Sabine – CeMAP Qualified – 29 years experience

Lenders typically use salary plus dividends, or net profit from company accounts, depending on your business structure.

If you're a limited company director, lenders have different approaches to calculating your income for mortgage purposes. Most commonly, they'll use your salary plus dividends as shown on your tax returns (SA302). However, some lenders will consider your share of the company's net profit before tax, which can significantly increase your borrowing power if you retain profits in the business rather than drawing them as dividends. The method used can make a substantial difference to how much you can borrow.

Your home may be repossessed if you do not keep up repayments on your mortgage. Your Home Finance Ltd is authorised and regulated by the Financial Conduct Authority (FCA 989177).

Key Points

1Most lenders use salary + dividends from your SA302 tax returns
2Some lenders accept net profit before tax for higher borrowing
3Retained profits can count if you have a shareholding over 20-25%
4You'll typically need 2-3 years of accounts and tax returns
5Declining profits may mean lenders use the lowest year
6The right lender choice can dramatically affect your maximum borrowing

Eligibility Criteria

Minimum 2 years trading history as a limited company director
Company accounts prepared by a qualified accountant
SA302 tax calculations and tax year overviews
Shareholding typically 20%+ for profit-based calculations
Business must be profitable and showing stable/growing income

Typical Timeframe

You'll need at least 2 years of accounts for most lenders, though some specialist lenders accept 1 year. Applications typically take 2-4 weeks with complete documentation.

Next Steps

1Gather your SA302 tax calculations for the last 2-3 years
2Get your accountant to prepare a projection letter if needed
3Calculate your income using both salary+dividends and net profit methods
4Speak to a specialist broker who understands director income
5Consider timing - apply after your best year's accounts are filed

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How Do Lenders Calculate Income from Dividends for a Mortgage?

Key Points

Eligibility Criteria

Typical Timeframe

Next Steps

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