The director's mortgage problem
Tax-efficient directors typically take a small salary plus dividends and leave the rest as retained profit in the company. Most lenders assess only salary + dividends — so a director running a healthy, profitable business can look like a low earner on paper. The best director mortgages come from lenders that assess salary plus your share of net (or retained) company profit, often increasing borrowing dramatically.
1. Salary + dividends mortgages (the default)
The mainstream approach: lenders add your director's salary and the dividends you've drawn, usually averaged over two years. Best for directors who draw most of their profit as income each year. Simple and widely available, but penalises anyone retaining profit.
2. Salary + net/retained profit mortgages (the director's win)
A smaller but significant group of lenders add your share of the company's net profit — whether or not you drew it — to your salary. For a director leaving profit in the business, this can lift assessable income substantially and is usually the single best lever on borrowing.
Pros: can dramatically increase borrowing. Cons: needs healthy, evidenced profits and the right lender; not all do it.
3. Mortgages for directors with one year of accounts
Newer companies aren't shut out — some lenders accept a single year of accounts, especially where the director has relevant prior experience. Best for directors who recently incorporated but have a strong first year.
4. Mortgages for directors with fluctuating profits
If profits swing year to year, lender choice matters — some average, some use the latest year, some the lowest. The best lender depends on which direction your profits moved. A specialist broker matches the trend to the right calculation.
What directors should prepare
- Two years of accounts (or one, with the right lender) plus SA302s and tax year overviews
- A reference or figures from your accountant confirming salary, dividends and net profit
- Business and personal bank statements
- Evidence the company remains profitable and trading well
Plan ahead with your accountant
There's a genuine tension between minimising tax (lower declared income) and maximising borrowing (higher assessable income). If a purchase is 1–2 years away, plan your salary/dividend/profit position with your accountant and a broker together so your accounts present well when you apply.
How to find the best director mortgage
The difference between lenders can be tens of thousands in borrowing — so matching your profit structure to a lender that assesses retained profit is everything. A whole-of-market broker who specialises in directors knows exactly which lenders to approach. Find a company director mortgage specialist through Nesto — free, no obligation.
Frequently asked questions
Can lenders count retained profit, not just dividends?
Some can — they add your share of net company profit to your salary, which often increases borrowing significantly compared to salary + dividends only.
How many years of accounts do directors need?
Usually two, but some lenders accept one year, especially with relevant prior experience.
Why does one lender offer me far more than another?
Because they assess income differently — salary + dividends vs salary + retained profit. The right method can transform your borrowing.
Should I increase my salary before applying?
Not necessarily — with a lender that uses retained profit you may not need to. Plan with your accountant and broker before changing how you pay yourself.
Do directors pay higher mortgage rates?
No — matched to the right lender you access standard rates; the difference is purely how much they'll lend.