Business Owner & Limited Company Director Mortgage Hub
Specialist mortgage advice for Business Owners and Limited Company Directors in Brackley, Oxfordshire, Buckinghamshire & Northamptonshire,
Running your own business shouldn’t mean finding the right mortgage is complex or stressful.
Thomas Honour Mortgage Services helps business owners and limited company directors across Brackley, Oxfordshire, Buckinghamshire and Northamptonshire to secure the residential mortgage they need.
This hub is specifically for:
- Limited company directors
- Business owners
- Shareholders with 25% or more ownership
- Directors with retained profits
- Those who earn income via dividends
- Directors and business owners who have been told they cannot borrow enough
“We believe that how you pay yourself shouldn’t limit your mortgage options”
If you are a Limited Company Director or own 25% or more of the business, you are treated similarly to a self-employed applicant for residential mortgage purposes.
As business owners, you can pay yourself in different ways and choosing the right lender is crucial to maximising your mortgage affordability. At Thomas Honour Mortgage Services, we help business owners and limited company directors across Brackley, Oxfordshire, Buckinghamshire and Northamptonshire to maximise mortgage affordability based on:
- Salary
- Dividends
- Net profits
Because we believe that how you pay yourself shouldn’t limit your mortgage options
(If you are a sole trader, in a partnership, an LLP salaried partner, CIS worker or contractor, please visit our Self-Employed Mortgage Hub)
(This hub applies to residential mortgages only. If you require a Limited Company Buy to Let Mortgage, please refer to our Buy to Let section.)
How Limited Company Director Income Is Assessed
Salary & Dividends vs Salary & Net Profit
As a limited company director, how your income is assessed can significantly affect your borrowing capacity.
When it comes to a mortgage, your affordability is usually assessed in one of two ways:
- Salary & Dividends (Traditional method)
- Salary & Net Profit
1. Salary & Dividends
This is the traditional and most common assessment method by mainstream lenders.
Under this model, lenders use:
- Your PAYE salary
- Dividends declared on your personal tax return
Typically averaged over the last 2 years, but some lenders will consider one year’s trading only.
Example
If you pay yourself:
- Salary: £12,570
- Dividends: £37,430
Your income for mortgage affordability purposes is: £50,000
Pros
- Widely accepted by most lenders
- The most common way mainstream lenders assess income
Cons
- Limited to personal income only
- May restrict borrowing if profits are left in the company
Case Study - Salary & Dividends
The Background
Our client was a 100% shareholder in their limited company.
- Salary: £12,570
- Dividends: £37,430
- Net company profit: £55,000
They withdrew the majority of profits via salary and dividends and retained only a small amount in reserves.
What We Did
We recommended a high street lender with a market-leading rate that assessed affordability using salary and dividends only.
In this case, it worked perfectly because the mortgage was affordable based on the salary and dividend method.
2. Salary & Net Profit
This approach is less common but may boost mortgage affordability in the right scenario.
Under this model, lenders assess:
- Salary
- PLUS your share of net profit
This allows directors who retain profits in the business to use those profits for affordability purposes – regardless of how much income was taken personally.
Example
- Salary: £12,570
- Dividends: £37,430
- Net profit: £110,000
- Shareholding: 100%
a) Under a salary & dividend model, the annual income used for affordability = £50,000
b) Under a salary & net profit model, the annual income used for affordability = £122,570
Pros
- It may increase borrowing power if your net profits exceed dividends taken
Cons
- Fewer lenders offer this approach
Case Study - Salary & Dividends
The Background
Our client is a 100% shareholder in their limited company.
- Salary: £12,570
- Dividends: £37,430
- Net profit (2-year average): £104,000
Our clients’ accountant advised them to retain some of their profits in the company for future business investment and personal tax efficiency.
Many lenders using the traditional method to assess affordability would typically use £50,000 (salary plus dividends), which did not allow them to borrow enough for their desired purchase.
What We Did
- Assessed the financial accounts
- Established that the net profit significantly exceeded the dividends taken
- Recommended a lender willing to use salary + net profit to maximise affordability
- Secured a competitive interest rate
This method significantly increased their mortgage affordability compared to the traditional method.
Shareholding Rules
One of the most important distinctions for whether a lender will treat you as employed or self-employed is based on your percentage shareholding.
If you own 25% or more
Most lenders will treat you as a director/ self-employed for mortgage purposes.
They will require:
- Company financial accounts
- Personal tax returns (SA302s & tax overviews)
- Business bank statements
- Possibly an accountant’s certificate
If you own less than 25%
You are often treated as an employed applicant if your shareholding is under 25% and you take a PAYE salary only.
However, if you need dividend income to support affordability, most lenders will switch classification and assess you under director/self-employed rules.
Multiple Directors & Share Structures
Where there are multiple shareholders, lenders will typically assess:
- Your individual shareholding percentage
- Your share of net profit
- How profits are distributed
- Whether dividends are consistent
- Whether the company relies heavily on one director
In some cases, complex share structures require additional explanation.
Clarity and documentation are key.
Case Study – 20% Shareholder
The Background
A director with 20% shareholding:
- Salary: £45,000
- Dividends: £25,000
Initially assumed they would be treated as employed.
However, without the dividend income, affordability was insufficient.
The Challenge
Once dividends were required for affordability, most lenders reclassified the applicant as self-employed.
This meant:
- Accounts required
- SA302s required
- Additional underwriting
What We Did
We identified lenders comfortable with:
- Under 25% shareholding
- Dividend-supported affordability
- Stable company trading
We ensured full documentation was prepared from the outset.
The Outcome
The lender accepted:
Salary + dividend income
And the client secured the mortgage without delay.
Frequently asked questions
Yes. But the amount you can borrow will vary depending on whether the lender uses salary and dividends or salary and net profit for affordability purposes.
Yes, some, but not all, lenders will use your net profit to assess mortgage affordability. Lender selection is critical.
Yes. Many lenders will also include dividends or net profit when assessing affordability.
Yes. Although most lenders require two years, there are some lenders who may consider one year.
Yes, in many cases, if you are relying only on your salary to be used for affordability you will be treated as employed. In some cases, lenders may treat you as self-employed if any dividend income is used for affordability purposes.
Yes. Lenders will usually average dividends and look for sustainability.
Some lenders may request an accountant’s certificate to verify your income.
Why work with Thomas Honour Mortgage Services as a Business Owner or Limited Company Director?
Our team specialises in working with business owners and Ltd company directors, guiding you through the process from start to finish. We focus not only on finding a competitive mortgage deal, but on ensuring your affordability is assessed in a way that suits you best.
We are a Brackley-based mortgage broker, working with clients across Oxfordshire, Buckinghamshire, Northamptonshire and London.
Next step
Let Thomas Honour Mortgage Services be your trusted partner in structuring your mortgage around your business income. Contact us today and experience the difference specialist advice can make.