mortgage broker.co.uk

Mortgages for Company Directors

Written by Simon Baker BSc (Hons)  |  Reviewed by The Complete Mortgage Shop, FCA regulated (FRN 728880)  |  Last updated 16 June 2026

Company directors frequently find that standard mortgage applications underestimate their income. A high-street lender looking only at a payslip will see the salary a director chooses to pay themselves — often a low figure set for tax efficiency — and ignore the dividend income that represents the bulk of what the director actually earns. A specialist broker works with lenders who assess both.

How Lenders Assess Director Income

The standard approach among lenders who understand director income is to add the most recent two years of salary and dividends together and average them. The evidence required is:

• SA302 forms (or equivalent HMRC self-assessment summary) for the last two tax years
• Corresponding tax year overviews from HMRC
• Company accounts for the same period
• An accountant’s reference letter confirming the income figures and business outlook

If your salary and dividends have increased significantly in the most recent year, a broker can identify lenders who use the latest year’s figures rather than a two-year average — this can substantially increase the mortgage available.

The 20–25% Shareholding Threshold

Most lenders treat any applicant who owns 20% or more of a company as self-employed, regardless of whether they also receive a PAYE salary. This means that even if you have payslips, the lender will want company accounts and SA302s rather than simply accepting employment income evidence. Understanding this threshold is important: directors who own less than 20% of a large company may be assessed as employed rather than self-employed.

Net Profit Add-Back

A smaller number of lenders will go further and consider retained profit in the company in addition to the salary and dividends drawn. If you own 100% of your company and have retained significant profit within it, some lenders will include a portion of that retained profit in their affordability assessment. This is particularly relevant for directors who have been deliberately retaining profit for tax planning purposes. Not all lenders offer this, but a broker can identify those that do.

IR35 and Contractor Directors

If you operate through a limited company but your engagements fall within the IR35 rules — meaning HMRC treats your income as deemed employment — some lenders will accept a day rate or contract rate as the basis for affordability rather than the salary and dividends drawn. This can be more favourable for contractors whose drawn income does not reflect their contract rate. The evidence needed is the contract itself, plus confirmation of the IR35 status.

New Directors: Under Two Years of Accounts

Most lenders require two years of trading history for a director applying on the basis of self-employed income. Some will accept one year if the accounts show a strong and growing business. Very recently incorporated companies — under twelve months — are harder to mortgage on director income alone, though it may be possible if the director has a strong employed income history immediately prior to incorporation in the same field.

Frequently Asked Questions

How do mortgage lenders assess a limited company director’s income?

Lenders assess director income as salary plus dividends drawn from the company. Directors with a shareholding of 20–25% or more are treated as self-employed, requiring two years of company accounts and SA302 returns. Some specialist lenders will add net profit retained in the business to assessable income.

Can a company director with less than two years of trading get a mortgage?

Most standard lenders require two years of trading accounts. Some specialist lenders will consider one year of trading for directors in established professional fields with strong trading projections. A broker can identify which lenders accept shorter trading histories and how to present the application correctly.

How does IR35 affect how contractor income is assessed?

Contractors inside IR35 are taxed as employees but paid through a limited company. Some lenders treat inside-IR35 income as employed income; others assess it on a director basis. Outside-IR35 contractors are assessed on their company’s salary, dividends and net profit. A specialist broker understands how each lender approaches IR35 status.

Getting the Right Mortgage as a Director

Directors who also draw buy-to-let income should note that rental income is assessed separately and can be combined with business income by the right lender. See also our guide to accountant mortgages if you are an accountant operating through your own practice.

To speak to a qualified adviser, please submit an online enquiry or call 0800 310 1340.

YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOAN SECURED ON IT.