Mortgages Using Retained Profits

If you run a limited company and keep some profit in the business rather than drawing it all out, a standard mortgage assessment based on salary and dividends alone can understate what you could genuinely afford. A small number of specialist lenders will also count your share of the company's retained profit, which can meaningfully increase your borrowing.

This guide explains how retained profit is assessed, who it applies to, and what you'll need to show. If you're a sole trader rather than a company director, our sole traders and partnerships guide covers how your income is assessed instead.

What Is a Mortgage Using Retained Profits?

A mortgage using retained profits is one where the lender adds your share of the company's net profit, kept in the business rather than paid out, to your salary when working out how much you can borrow. It's distinct from the standard approach, which looks only at salary plus dividends actually drawn.

This matters because dividends and retained profit both come out of the same pot of post-tax profit. If a lender counted dividends and retained profit together, it would effectively count the same money twice. In practice, lenders that offer this route use salary plus your share of net profit, and leave dividends out of the calculation entirely.

Can I Get a Mortgage Using Retained Profits?

Yes, this is a legitimate and increasingly used way to support a mortgage application, though only a minority of lenders offer it. It's aimed specifically at limited company directors, whether you're the sole shareholder or you own part of the business alongside other directors. If you own, say, 50% of the company, you'd typically be assessed on 50% of the retained profit, along with your own salary.

Am I Eligible for a Mortgage Using Retained Profits?

Eligibility depends on the individual lender's criteria rather than a single industry-wide rule. Most lenders who offer this route want to see stable or growing profit over at least two completed years of company accounts, rather than a single strong year that might not repeat. They'll also run a standard credit check, looking at your credit score and any history of CCJs, IVAs, bankruptcy, or missed payments, alongside the usual affordability checks.

If you have any adverse credit in your history, it's still worth exploring your options. Our adverse credit hub covers how lenders view past credit problems, and our guide on the credit score you need to buy a house explains how scores and specific marks are weighed differently by different lenders.

How Much Can I Borrow Using Retained Profits?

As with any mortgage, how much you can borrow comes down to affordability, calculated as a multiple of your assessed income. To illustrate how the maths works, take a director with a £35,000 salary and an average net profit share of £60,000 over the last two years. Assessed on salary and dividends alone, a lender might only count a modest dividend actually drawn, say £20,000, giving an assessed income of £55,000. Assessed on retained profit instead, the lender uses salary plus the full profit share, giving an assessed income of £95,000. At a typical income multiple of around 4.5x, that's the difference between roughly £248,000 and £428,000 of borrowing, though the exact multiple and treatment vary by lender.

Because so few lenders offer this route, getting matched to the right one makes a real difference to your borrowing figure.

What Deposit Do I Need?

Lenders offering retained profit assessments typically ask for a minimum deposit of around 10% of the property's price, though this varies by lender and circumstances. A larger deposit generally widens your choice of lender and can help offset other factors in your application, such as a shorter trading history. Our mortgage deposit guide explains how deposit size interacts with the rest of your application, and our overview of mortgage interest rates covers how your rate is likely to be affected.

How Many Years of Company Accounts Do I Need?

Most lenders who offer retained profit assessments want to see two or more years of completed company accounts, so they can confirm the profit is stable or growing rather than a one-off. A handful of specialist lenders will consider just one year of accounts, particularly if you have relevant industry experience or a strong trading history before incorporating. If your business is newer still, our guide on mortgages with two years' accounts sets out what most lenders expect to see by that stage.

How to Apply for a Retained Profit Mortgage

Applying for a retained profit mortgage works differently from a standard application, mainly because so few lenders offer it. You'll typically need your last two years of full company accounts (including the CT600 corporation tax return), SA302s or tax year overviews for your personal income, and recent business bank statements. Going to the wrong lender, or trying to apply through a bank that only assesses salary and dividends, can mean a lower offer than you'd get elsewhere, or a straight decline. Our guide on how to get a mortgage covers the wider application process, and speaking to a broker who knows which lenders offer this route is the quickest way to avoid wasting an application.

If you're a contractor rather than a standard limited company director, our contractor mortgages guide may be a better fit, and our self-employed mortgage calculator can give you a starting estimate either way. You can also check your credit file for free through our own free credit check before you apply, to catch anything that might affect your application.

If salary and dividends alone don't reflect what your business can really support, we'll match you with lenders who look at the full picture, including retained profit, so you're not under-assessed. Call us on 0191 580 9890, message us on WhatsApp, or use our mortgage calculators to get a starting figure.

The above blog has information contained within which was correct at the time of publication but is subject to change.