- Directors can get residential mortgages; the issue is how a lender measures your income.
- Most lenders use salary plus dividends, typically at around 4.5 times income.
- A minority lend on salary plus retained profit, which often allows materially more borrowing.
- Drawing low dividends to save tax can quietly shrink the mortgage you qualify for.
- A broker who knows director-friendly lenders is usually worth more than chasing a headline rate.
Estimate your borrowing
How lenders read director income
For an employee, income is simple: it is the salary on the payslip. For a director it is not, and lenders take different views:
- Salary plus dividends. The most common approach. The lender adds your director's salary to the dividends you have actually drawn, usually averaged over the last one or two years.
- Salary plus retained profit. A smaller group of lenders add your salary to your share of the company's net profit, whether or not you drew it as dividends. For a director who leaves profit in the company for tax reasons, this can transform the borrowing figure.
The estimator above uses salary plus dividends, the route most directors will be assessed on.
The retained-profit route
Tax planning and mortgage applications can pull in opposite directions. A director who takes a £12,570 salary and modest dividends to stay out of higher-rate tax looks low-income to most lenders, even with six figures sitting in the company.
Lenders that assess salary plus retained profit solve this. They look at what the company earned, not just what you extracted. There are fewer of them, their criteria are specific, and this is precisely where a specialist broker earns their fee, by knowing which lenders read your accounts the generous way.
Documents you'll need
- Two (sometimes one, occasionally three) years of finalised accounts, ideally signed off by a qualified accountant
- SA302 tax calculations and the matching tax year overviews for the same years (see our SA302 mortgage guide)
- Recent personal and business bank statements
- Proof of deposit and ID
Clean, consistent figures across your accounts, SA302s and bank statements make underwriting far smoother than numbers that need explaining.
What strengthens your case
- Plan a year ahead. If a mortgage is coming, the dividends you draw this year may matter more than the tax you save.
- Keep accounts current. Lenders want recent, finalised figures, not draft or year-old accounts.
- Match the lender to your shape. Low-dividend, high-retained-profit directors should target retained-profit lenders from the start.
Take Home models how a change in your salary and dividend mix moves both your tax bill and your mortgage-relevant income, so you can see the trade-off before you commit.