Using Retained Profits in Your Business to Get a Mortgage
If you’re a limited company director, you’re probably used to keeping money within your business rather than drawing it all out as income. While that’s often a smart move for tax efficiency and cash flow, it can present a problem when you try to get a mortgage.
The good news? Some mortgage lenders will consider retained profits — not just your salary and dividends — when assessing affordability. The key is working with the right broker and choosing the right lender.
💼 What Are Retained Profits?
Retained profits are the earnings your company keeps after paying business expenses, salaries, and dividends. Many directors leave money in the company to reinvest or protect against future downturns.
From a lender’s point of view, these profits can show:
- Stability
- Good cash flow management
- The company’s capacity to pay more (even if you don’t draw it)
Yet not all lenders take them into account — and that’s where the issue lies.
🚫 Why Most High Street Lenders Don’t Count Them
Traditional mortgage lenders usually focus only on:
- Your basic salary (from payslips/P60)
- Your dividends (usually from your SA302 or tax calculation)
They won’t look at what’s left in the business, even if it’s clear you could draw more if needed. That means many directors are unfairly penalised for being financially sensible.
For example:
If you take £12,000 salary + £20,000 dividends per year, lenders may assess your income as £32,000 — even if your company has £100,000 in retained profit.
✅ How Specialist Lenders Can Help
Some specialist lenders (and even high street banks) and private banks will go deeper. Instead of just looking at personal income, they’ll assess:
- Net profit before tax
- Retained profit over several years
- Director’s share of ownership
- Business bank statements
- Accountant’s confirmation of affordability
They treat your business as an extension of your financial strength — not something to be ignored.
📄 Documents You’ll Usually Need
To get a mortgage using retained profits, most lenders will ask for:
- 2 years’ full company accounts
- Your latest SA302 and Tax Year Overview
- Business bank statements
- An accountant’s letter confirming your income and shareholding
- Explanation if profits are increasing or decreasing significantly
As your broker, we help package all this clearly and persuasively.
💡 Example: How It Works in Practice
Tom runs a digital agency through a limited company.
- He pays himself £9,000 salary and £20,000 in dividends
- His company retained £120,000 last year
- Standard lenders said he could borrow around £130,000
- With a specialist lender that considers retained profits, he was approved to borrow £358,000
The difference? A lender who looks at the full picture.
🤝 Why Work With a Broker?
Every lender has its own rules — and most won’t advertise their stance on retained profits publicly.
At Mortgage Links, we know which lenders are director-friendly, which will consider retained profits, and what evidence they need. We also work closely with your accountant to make the process as smooth as possible.
📞 Ready to Get Started?
If you’re a limited company director and want to maximise your borrowing potential, speak to us today. We’ll help you understand your options, avoid wasted credit checks, and present your case in the best possible light.
