Mortgage Using Retained Profit
A retained profit mortgage looks at the profit left inside the company rather than only what the director draws. Directors who leave profit in the business are often assessed as though they earn far less than the business actually makes.
- Why salary and dividends can understate your income
- Which lenders publish a share of net profit basis
- What evidence the company has to provide
- When simply drawing more is the better answer
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Send us your salary, dividends and company net profit for the last two years and we will show you what each assessment basis produces.
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The gap between what you earn and what you draw
A director whose company makes 120,000 pounds of net profit but who draws a small salary and 30,000 pounds of dividends looks, on the standard assessment, like someone earning around 42,000 pounds. That is the figure most lenders will use, and it is why well-run companies with prudent directors can produce disappointing mortgage offers.
The alternative is an assessment based on your share of the company net profit rather than on what you extracted. Aldermore publishes salary plus dividends, or share of net profit, as its director income basis. Pepper Money publishes that majority shareholders may use their share of the most recent year trading net profit. Both are published positions rather than informal concessions, which is what makes them worth targeting.
It is not a free upgrade. A lender taking this route is looking at the company as well as at you, so it wants finalised accounts, and it will take a view on whether the profit is genuinely sustainable rather than a one-off. Expect more questions about the business itself than a salary and dividends case would generate.
The simpler alternative, where it is available, is to draw more in the year before you apply. That is a tax decision as much as a mortgage one, so it belongs with your accountant. Our salary and dividends mortgages page covers the standard route, and GOV.UK explains the tax position on extraction in its guidance on tax on dividends.
At a Glance
How company profit is treated by lender
Reproduced from each lender own published criteria guide. Where a lender does not publish a retained profit basis we have not implied one.
| Lender | Director income basis published | Conditions |
|---|---|---|
| Aldermore | Salary plus dividends, or share of net profit | 2 years of tax calculations and tax year overviews as standard. Company accounts required where net profit is used. |
| Pepper Money | Majority shareholders may use their share of the most recent year trading net profit | Add-backs for 100 per cent owners cover car allowance, pension contributions, use of home as office and private health insurance. Finalised accounts required. |
| Precise | Remuneration plus dividends, director car allowance and director pension payment | Does not publish a share of net profit basis in its residential criteria guide, so we have not stated one. |
Criteria correct as at 14 August 2026. Sources: Aldermore Residential Criteria Guide; Pepper Money Mortgage Criteria Guide; Precise Mortgages Residential Criteria Guide. Correct as at 14 August 2026. Criteria change without notice. Lender criteria change without notice and this table is a general guide, not advice or an offer of credit. Your own circumstances, the property and the lender’s assessment at the time will determine what is actually available to you.
What a retained profit case needs
These cases succeed on the strength of the company evidence rather than the personal documents. Company filings are publicly visible through Companies House, and lenders do look.
Where to go next
The pages most often read alongside this one.
Salary And Dividends Mortgage
The standard director assessment, and when share of net profit gives a better answer.
Limited Company Director Mortgages
Salary and dividends, share of net profit and retained profit – how company directors are actually assessed.
Latest Year Or Average?
The single policy choice that most often decides how much you can borrow.
Mortgage With Declining Profits
A down year does not automatically end it – but it does change which lender and which figure applies.
Accountant Qualifications
Lender lists differ. Your accountant can be acceptable to one lender and not another.
SA302s Or Full Accounts
Tax calculations, tax year overviews, finalised accounts – what each lender actually wants to see.
Self-Employed Mortgages
The main guide: how lenders assess self-employed income, what they ask for and which lenders are worth approaching.
How Much Can I Borrow?
See what your income could realistically support before you speak to a lender.
How we place a self-employed or complex income case
Specialist lenders underwrite manually, so how the income is evidenced and presented genuinely changes the outcome.
Establish how you are actually classed
Lenders do not all draw the line in the same place. Precise treats anyone with a shareholding of 25% or more, or who is responsible for paying their own tax and National Insurance, as self-employed. Getting this right first decides which criteria apply to you.
Read the accounts the way an underwriter will
We work from your tax calculations, tax year overviews and finalised accounts rather than a rough turnover figure, because the number a lender uses is often materially different from the number you think of as your income.
Match the income shape to the right lender
Latest year or average, salary and dividends or share of net profit, one year of accounts or two – these are lender policy choices. We place you against published criteria rather than guessing.
Package the case properly
Specialist lenders underwrite manually. A clear note explaining a dip in profit, a change of trading style or a new contract usually carries more weight with an underwriter than the raw figure on its own.
Plan the next few years
Trading history builds. We look at whether waiting for one more set of accounts, or how you draw income between now and then, would open up materially better options at your next remortgage.
Read More If You Work For Yourself
How your accounts are read is only part of it. These pages cover the rest of the case.
Self-Employed Mortgage Guide
How lenders actually read accounts, day rates and dividends.
Self-Employed Mortgages
How lenders read accounts, day rates and dividends when you work for yourself.
How Much Can I Borrow?
A realistic borrowing figure before you start viewing properties.
See what your company profit would actually support
Send us salary, dividends and net profit for the last two years. We will show you both assessment bases side by side and which lenders publish each.
Read more about our salary and dividends mortgages, limited company director mortgages or self-employed mortgages guide.
Retained Profit Mortgages - Frequently Asked Questions
Can a lender use my company profit instead of my dividends?
Some will. Aldermore publishes salary plus dividends, or share of net profit, as its director income basis. Pepper Money publishes that majority shareholders may use their share of the most recent year trading net profit. It is not the market norm, so it is a matter of choosing the right lender rather than asking your usual one to make an exception.
What is retained profit?
It is profit the company has made and paid corporation tax on, but which has not been paid out to shareholders as dividends. It sits in the company rather than in your personal account. On a standard salary and dividends assessment it is invisible, which is why directors who reinvest often appear to earn far less than they do.
Do I need to be a majority shareholder?
Often yes. Pepper Money specifically refers to majority shareholders in the context of using a share of trading net profit. Where shareholding is split more evenly, expect the lender to look closely at whether you can actually influence how profit is distributed.
Will the lender look at my company accounts?
Yes, and in more detail than on a salary and dividends case. Finalised accounts are normally required, and the underwriter will form a view on whether the profit level is sustainable rather than simply reading the figure. Expect questions about the business as well as about you.
Is it better to just draw more dividends?
Frequently, yes, if the tax cost is acceptable. Drawing more in the year before you apply produces a straightforward salary and dividends case that most lenders can assess, which usually means more choice and better pricing. It is a decision to take with your accountant, because the tax consequences are real.
How far back do lenders look at profit?
Usually the same period as any other self-employed assessment, most often the last two years, with the treatment of the two years depending on the direction of travel. Pepper Money refers to the most recent year trading net profit for majority shareholders, which points at the latest year rather than an average.
Does a director loan account affect this?
It can. An overdrawn director loan account is effectively money you owe the company, and underwriters treat it as a liability and as a question about how the business is run. Clearing or explaining it before an application is usually worth doing.
What if the company has several directors?
Then your share of the profit is what matters, and the lender will want that share evidenced from the accounts and the shareholding rather than assumed. Where shareholdings are unequal or have changed, provide the documentation up front.
Does retained profit help with affordability as well as income?
Indirectly. It raises the assessed income figure with lenders that use it, which feeds the affordability calculation. It does not change your committed outgoings, so a high profit figure alongside heavy personal credit commitments will still be constrained by affordability.
Am I definitely classed as self-employed as a director?
Almost certainly, and by a wider test than you might expect. Precise treats anyone with a shareholding of 25 per cent or more, or who is responsible for the overall payment of their own tax and National Insurance, as self-employed. Our guide on whether you count as self-employed goes through this in detail.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.