Director Mortgages Using Latest Year's Net Profits

Maximise your borrowing capacity using your share of your company's latest trading year net profit.

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Graham Cox - Founder & Cemap Mortgage Advisor | SelfEmployedMortgageHub.com
Graham Cox
CeMAP Mortgage & CPSP Specialist Finance Advisor

In common with many other company directors, you might have elected to minimise your personal tax liability by retaining some company profits on the balance sheet.

Whist understandable, retaining profits can have the unfortunate side effect of restricting your borrowing capacity with some mortgage lenders.

Even in 2025, many banks and building societies still use salary and dividends to assess director's income. Often by taking an average from the last two to three years' tax calculations.  

So by restricting dividends in order to reduce income tax, directors can unwittingly reduce how much they can borrow.

The good news is some mortgage providers have introduced more flexible lending criteria, including the use of net profits. Better yet, some work off your latest year's net profit and salary, rather than an average.

As a result, it's now possible for a limited company director to have the best of both worlds. Maximising how much they can borrow on their mortgage, whilst minimising their tax bill by restricting dividends.

Read on to find out more...

Did you know?

As a company director, you can receive up to 80% of your gross income in sickness benefit every month, if you're unable to work due to illness or injury.

And the best part... the premiums are 100% tax deductible against company profits!

Can I use my latest year's company net profits to get a mortgage?

Yes, nowadays, many banks and building societies are happy to consider your share of the latest year's net profit after corporation tax for income and affordability assessment.

That said, most still prefer to average salary and dividends or salary and net profits from your last two or three years company accounts.

How do I qualify?

Most mortgage providers require at least two year's trading history and submitted company accounts, some three. They usually want to see a consistent track record of increasing profits year-on-year.

Are company profits volatile?

Banks and building societies may use an average figure if trading performance is erratic. For example, rising profits in year 3, followed by a decrease in year 2, and an increase in the latest year could raise a red flag with a lender.

Do the applicants' have a sufficiently large shareholding?

Some lenders only consider the latest year's net profit and remuneration if the applicant is a self-employed company director with at least a 50% shareholding in their company.

Some do require 100 per cent ownership. Joint applicants, who own 50 percent or more equity between them are also sometimes acceptable. Whilst other lenders are comfortable with just a 25 percent stake.

How falling profits are assessed?

Falling profits can ring alarm bells, particularly if the falls are substantial.

For example, where the decrease in profit from the previous year is greater than 20%, some mortgage companies won't lend at all.

Others, who would normally use the an average of the past two or three years's net profit share for rising profits, will almost certainly use the latest year's reduced figures instead.

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How can I get a mortgage?

The next step is to speak to an independent adviser at SEMH.  Self-employed mortgages are all we do, and net profit mortgages, often based off the latest year's trading accounts, are our bread and butter.

When you get in touch, we'll advise if your case is proceedable, how much you can potentially borrow and answer any questions you have.

Then, if you're happy to continue, we'll guide you through the entire mortgage application process, removing the stress, time and hassle of doing it all yourself.

We'll also source the best pound-for-pound mortgage product from across the market, based on your unique circumstances. Factoring in the cost of any mortgage related fees such as product fees, valuation fees and so on, as well as any incentives like cashback from the lender on completion.

Potentially saving you thousands of pounds.

To start, complete this quick and easy quiz or call 0117 205 0655 for a friendly, no-obligation chat to discuss your mortgage requirements.

Our office lines are open between 9am and 5.30pm Monday to Friday. There's no call-center, or call waiting. You'll speak to an adviser direct.

We look forward to talking with you soon.

Graham Cox - MLIBF CeMAP Mortgage Adviser & Director of Hub FS Ltd

About the author

Graham Cox is the founder of Self Employed Mortgage Hub, the trading name of Hub FS Limited.

Based just north of Bristol, SEMH is an independent, whole of market broker and a true specialist in self employed mortgages, helping business owners across the UK get great mortgage and protection deals.

Graham's market commentary and analyis is regularly quoted in the national press and media, including The Guardian, Telegraph, FT Adviser, and BBC Radio Bristol.