Retained Profit Mortgage
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Mortgages For Professionals with complex incomes through the main high street lenders
High street lenders typically provide more appealing rates, making them the preferred choice for many professionals seeking mortgage solutions. However, navigating the complexities of professional incomes can present challenges in securing loans from these lenders.
Professionals often assume they must seek alternative lenders due to the intricacies of their income streams. Yet, armed with a deep understanding of various payment structures, we confidently facilitate successful mortgage applications with high street lenders.
In fact, a substantial 93.4% of our mortgage applications are seamlessly processed through reputable high street lenders, showcasing our expertise in navigating complex income scenarios.
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Peter Stokes
Director
I am an expert in: Retained Profit Mortgage
CIB level 3 in Mortgage Advice & Practice
Retained Profit Mortgage
If you run a limited company, you might choose to leave some of your profits in the business rather than taking them all out as a salary or dividends. While many high street lenders focus only on what you personally withdraw, some providers will look at your retained profits to help you secure a larger mortgage.
Our team speaks to many business owners who want to understand how this process works. Below, Peter Stokes answers some very common questions about which lenders accept retained profits, how they calculate affordability, what evidence you need to provide, and how we can help you find the right match for your situation.
What is a retained profit mortgage and how does it differ from a standard self-employed mortgage?
Retained profit relates specifically to limited companies, as sole traders and partnerships pay tax on all their income anyway. Because a limited company is a separate entity, the business gets taxed on its profits, while directors and shareholders draw money out via a salary and dividends.
Sometimes, shareholders and directors do not take out all of their share of the profit. You might do this because you do not need the money or you want to avoid paying additional tax at higher rates.
Many high street lenders look at what you have actually taken out of your company rather than what you could have taken. Retained profits are simply the difference between the two.
However, several lenders will look at the company accounts rather than what you have personally taken and base your affordability on that.
Which mortgage lenders will consider retained profits as part of your income?
The list of lenders that will consider retained profits as part of your income can vary from time to time. HSBC is one lender that can be particularly suitable in these circumstances, as they have a strong approach to considering retained profits as part of an applicant’s income [information correct at time of recording in September 2026].
Other high street lenders also have the ability to look at it in certain circumstances. This is especially true if we are talking about larger mortgages that might run through premier underwriting units.
I would say the list remains fluid. There are one or two lenders that definitely do it, and others that can do so in certain circumstances.
How do lenders calculate affordability when you leave profits in your company rather than drawing them as dividends?
Lenders who accept retained profits treat them very much as though you had taken the income, whereas a lender using salary and dividends will drop only that income into their affordability calculator.
These calculators take into account your age, level of deposit, and your outgoings. A lender that uses retained profits simply drops in a higher figure, as they consider your salary alongside your share of the retained profits.
The affordability assessment itself is not treated any differently; the only difference is the income figure they are able to use at the outset.
Is there a minimum salary you need to draw from your company before lenders will look at retained profits?
There is not a strict minimum salary required before lenders will look at retained profits. Instead, it is a combination of both your salary and your retained profit that matters.
In my experience, most directors keep their salaries quite low. This is usually done to minimise personal tax while still meeting National Insurance contributions, which helps you maximise your state pension payments when you retire.
Naturally, this varies from year to year, and I have seen clients with salaries both lower and higher than those thresholds. It is the combination of the two figures put together that determines how much you can borrow.
Can you use retained profits from previous years, or do lenders only look at the most recent year?
Lenders that look at retained profits generally work on a two-year average, much like the vast majority of other self-employed lenders. If your figures are going up, they will average them out. If your figures are going down, they will take the most recent year.
There are one or two lenders out there that will use your most recent year’s income. However, those lenders do not tend to be the ones that also factor in retained profits. If you are looking at retained profits, you are almost certainly going to need that two-year history.
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What’s the difference between how lenders treat retained profits versus dividends for mortgage purposes?
Dividends are the money you have actually taken out of your company, whereas retained profits are the profits before dividends are taken out. Think of retained profits as the overall pot that was available to you.
For example, you might have a retained profit of £100k, but you only took out £70k. Lenders that look at dividends will use £70k of income, whereas lenders that look at retained profits will use the £100k of income. This is the distinction in its most basic form.
| Lender uses salary and dividends | Lender uses retained profits | |
|---|---|---|
| Income figure used | What you actually took out | Salary plus your share of retained profits |
| Example: £100k profit, £70k drawn | £70k of income used | £100k of income used |
| Affordability calculator | Standard calculation | Same calculation, higher income figure |
| Main evidence | Personal tax calculations and tax year overviews | Company accounts, possibly business tax returns and personal tax calculations too |
| How common | Many high street lenders | One or two lenders, others in certain circumstances |
Lender policies change and every lender has its own criteria, so your position may differ. Your home may be repossessed if you do not keep up with your mortgage repayments.
Do you need a specialist mortgage broker to find lenders who accept retained profits?
I would certainly recommend using a mortgage broker for this type of mortgage. There are lenders that will consider retained profits as part of your income, so knowing which lenders to approach is key to identifying the most suitable options.
Retained profit mortgages are a little bit complicated because lenders look closely at your reserves, history, and ownership structure. If you are less than a majority shareholder, things can become much more difficult.
There are several quirks around retained profits that you need to navigate. Any decent mortgage broker will know these details and be able to work around them.
What evidence do lenders want to see to verify your company’s retained profits?
The proof for retained profits will come directly via the accounts for your company. Lenders may still want to see your personal tax calculations and tax year overviews as well.
They will often look at the company accounts and quite possibly the tax returns for the business too. In certain circumstances, you might need a letter from your accountant, but normally that is not required.
Can retained profits help you borrow more than if you just used your salary and dividends?
Normally, yes. It is very unusual for dividends to exceed profits, and you would not expect to see a case where dividends are greater than profits unless they are being drawn against previous year’s reserves. That is a whole different scenario to get into.
You would normally see a customer who wants to use retained profits where those profits are greater than the dividends. By including this greater amount of income, you are increasing the amount you can potentially borrow.
How do lenders view retained profits if your company has fluctuating profits year to year?
Fluctuating profits from year to year depend largely on what the trend is. If the trend is upwards, lenders are generally going to average those figures out. However, we have had cases where they have taken just the most recent year under certain circumstances.
This might be the case if you bought a piece of equipment the year before which lowered your profits. Alternatively, we could document a period of illness when you were not working. Normally, though, lenders will stick to an average.
If the trend is downwards, lenders will generally use the most recent year’s figures rather than averaging the income over the available years. Even in these situations, we may find that some lenders are willing to take a more flexible approach where there are specific circumstances that explain why the profits have decreased.
Summary:
If you are a limited company director, leaving profits in your business can help you manage your tax, but it can make getting a mortgage more complicated. Generally, lenders only look at the money you personally take out as salary and dividends, but our team can help you find lenders who look at your company accounts and include your retained profits. This approach lets us use a higher income figure, which can help you borrow more.
Working with our advisers is essential, because a lot of high street lenders do not accept retained profits. We know which lenders to approach, how to handle fluctuating profits, and what evidence you need to provide so you can secure the right mortgage for your business and personal goals.
Key Points:
- Retained profits are the overall profits left inside your limited company rather than taken out as salary and dividends.
- Certain lenders will base your mortgage affordability on your salary combined with your share of retained profits.
- Lenders usually look at a two-year average of your accounts, though they may use your most recent year if profits are going down.
- Including retained profits normally allows you to borrow more because the profit figure is usually higher than your actual dividends.
- Lenders will ask to see your company accounts, business tax returns, and personal tax calculations to check your income.
- Our advisers can help you navigate complex lender rules and find the right mortgage provider for your situation.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP TO DATE WITH YOUR MORTGAGE REPAYMENTS.
FOR SPECIALIST TAX ADVICE, PLEASE REFER TO AN ACCOUNTANT OR TAX SPECIALIST.