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Income Guide

Salary + Dividends vs Salary + Net Profit: Which Lenders Use Which

A comparison of how different UK mortgage lenders assess Ltd company director income, updated regularly.

Updated January 20268 min read

Overview

As a Ltd company director, the income calculation method your lender uses can dramatically affect your borrowing capacity. The two main approaches are:

Salary + Dividends

Uses only what you've actually extracted from the company. Penalizes tax-efficient directors.

Most common method

Salary + Share of Net Profit

Uses your share of company profits regardless of extraction. Rewards tax-efficient directors.

Best for retained profits

The impact

If your company makes £100k profit but you only take £50k in salary + dividends, a "salary + dividends" lender might lend you £225k while a "share of net profit" lender could offer £450k.

High Street Banks

Major high street banks vary in their approach. Some have updated their criteria to recognize retained profits, while others remain conservative.

High street bank criteria for Ltd company directors
Lender
Income Method
Min Trading
Contractors
Notes
NationwideSalary + Share of Net Profit2 yearsGood for tax-efficient directors
HalifaxSalary + Share of Net Profit2 yearsUses latest year or average if declining
BarclaysSalary + Dividends2 yearsAverage of 2 years
NatWestSalary + Dividends2 yearsAverage of 2 years
HSBCSalary + Dividends3 yearsLower of last 2 years - conservative
SantanderSalary + Dividends2 yearsLatest year if stable/growing
LloydsSalary + Dividends2 yearsAverage of 2 years

Best high street options

Nationwide and Halifax stand out among high street banks for using the more favorable "salary + share of net profit" method. Both also offer competitive rates.

Specialist Lenders

Specialist lenders often have more flexible criteria, especially for contractors and those with complex income structures. Many are broker-only.

Specialist lender criteria
Lender
Income Method
Min Trading
Contractors
Notes
AccordSalary + Share of Net Profit2 yearsExcellent for retained profits
KensingtonSalary + Share of Net Profit1 yearFlexible criteria
CLS MoneyDay Rate Annualization1 yearContractor specialist
CMMEDay Rate Annualization1 yearContractor specialist
PreciseMultiple Methods1 yearUses best method for client

Broker access

Many specialist lenders only accept applications through mortgage brokers. They're often worth considering if you have complex income or limited trading history.

Building Societies

Building societies often take a more personal approach with manual underwriting, which can benefit applicants with unusual circumstances.

Building society criteria
Lender
Income Method
Min Trading
Contractors
Notes
Yorkshire BSSalary + Share of Net Profit2 yearsManual underwriting
Coventry BSSalary + Dividends3 yearsConservative approach
Leeds BSSalary + Share of Net Profit2 yearsGood for complex cases
Skipton BSSalary + Dividends2 yearsAverage of 2 years

Manual underwriting advantage

Building societies with manual underwriting may consider factors automated systems miss, like a strong explanation for an unusual year or clear income growth trajectory.

Important Disclaimer

Lender criteria changes frequently. This table provides general guidance based on publicly available information and is not guaranteed to be current. Always verify criteria with a broker or the lender directly before making decisions.

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