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MortgageOS
Director Guide

The Limited Company Director's Mortgage Playbook

A comprehensive guide to navigating mortgage applications as a Ltd company director, from shareholding requirements to finding net-profit-friendly lenders.

Updated January 202615 min read

The Director Difference

As a limited company director, your relationship with income is fundamentally different from employed workers. You control when and how you extract money from your business, which creates both complexity and opportunity in mortgage applications.

The key challenge

Most mortgage lenders developed their processes for employed applicants with simple salary income. Director income — with its mix of salary, dividends, and retained profits — doesn't fit neatly into these systems.

Your Income Components

Director's Salary

Your PAYE salary from the company. Often kept low (around £12,570) to avoid National Insurance.

Always counted by lenders

Dividends

Payments from company profits to shareholders. The primary income for most tax-efficient directors.

Counted by most lenders

Retained Profits

Profits left in the company for tax efficiency or business reserves.

Only some lenders consider

Share of Net Profit

Your percentage ownership of total company profit (salary + dividends + retained).

Best for tax-efficient directors

Shareholding Thresholds

Your percentage shareholding affects which lenders you can use and how income is calculated.

20%

Minimum Shareholding

Entry threshold for most lenders

Most lenders require at least 20-25% shareholding to be treated as a director rather than an employee. Below this, you may be assessed on salary + dividends received only.

50%

Majority Shareholding

More lender options available

Some lenders require 50%+ ownership to use share of net profit calculations. Majority shareholders generally have the most favorable options.

100%

Sole Shareholder

Simplest calculation

If you're the sole shareholder, 100% of company net profit is attributed to you. This is the most straightforward scenario for lenders.

Shareholding splits

If you've split shares with a spouse for tax purposes, this affects your mortgage assessment. You'll only be assessed on your percentage share of profits. Consider this trade-off carefully.

Income Calculation Methods

Method 1: Salary + Dividends

Uses only what you've actually extracted from the company.

Salary: £12,570

+ Dividends: £40,000

= Assessable Income: £52,570

→ Borrowing capacity: ~£237k

Used by: Most high street banks, conservative lenders

Method 2: Salary + Share of Net Profit

Uses your share of total company profits, regardless of extraction.

Company Net Profit: £100,000

Your Shareholding: 100%

= Assessable Income: £100,000

→ Borrowing capacity: ~£450k

Used by: Nationwide, Halifax, Accord, Kensington, Yorkshire BS

The difference is dramatic

Same company, same year — but nearly double the borrowing capacitywith the right lender. This is why lender selection matters so much for directors.

Documentation Requirements

Standard Requirements

Company Documents

  • • 2-3 years certified company accounts
  • • Latest management accounts (if available)
  • • Company bank statements (3-6 months)
  • • Companies House confirmation statement

Personal Documents

  • • SA302s for 2-3 years
  • • Tax year overviews
  • • Personal bank statements
  • • ID and proof of address

Accountant Certification

Company accounts must be prepared by a qualified accountant (ACCA, ICAEW, CIMA, or AAT) for most lenders to accept them. If your accountant isn't qualified, you'll need to rely on SA302s from HMRC.

Optimization Strategies

1. Choose the Right Lender First

Before adjusting your income structure, identify lenders whose calculation method suits your current situation. It may be better to stay tax-efficient and use a net profit lender than to increase dividends for a salary+dividends lender.

2. Time Your Application

Apply after your strongest year's accounts are finalized. If this year is looking better than last, wait until new accounts are ready. Conversely, if income is dropping, apply before new figures are required.

3. Consider Dividend Timing

For salary+dividends lenders, dividends declared before your accounting year-end will appear in that year's accounts. Strategic timing can boost your assessable income for the right year.

4. Talk to Your Accountant Early

Discuss your mortgage plans 12+ months before you want to apply. Your accountant can help optimize your accounts for mortgage purposes while managing tax implications.

See which lenders suit your company structure

Get personalized lender matching based on your shareholding, income, and extraction strategy.

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Frequently asked questions