Mortgages Using Retained Profits

If you’re a company director, you might want to use your business’ retained profit to get a mortgage. However, it can be difficult because some mortgage lenders won’t accept this as your income for the purpose of working out how much you can borrow.

But with the right help and guidance, you can find the specialist lenders who will consider retained profits.

Can I get a mortgage using retained profits?

Yes, it’s possible. The way mortgage lenders calculate how much you can borrow for a mortgage if you’re a company director is usually by looking at your dividend income on top of your salary.  But quite often, your retained profits work out much higher than your dividend income and salary combined, so it’s pretty natural to want to use that amount instead because it can mean you could borrow more. 

Lenders each have their own way of doing things, and a lot of them will stick to their policy of not using retained profits to calculate mortgage affordability. They do this because they think that you should use your own personal income instead of the business income. 

But there's still specialist lenders who will calculate a mortgage based on retained profits available to you. And that’s where we come in. Our Mortgage Experts have plenty of experience getting mortgages using retained profits, and will make your application look as strong as possible.

How can I borrow more on a mortgage if I use retained profits from my business?

Quite simply, if your retained profits work out as a larger amount than your dividends and salary combined, then you should be able to borrow more money.

Mortgage lenders work out how much you can borrow by taking your annual income and multiplying it by a pre-determined number. In most cases that number is between 4 and 4.5.

So, let’s say your business’ retained profits were £100,000 and your combined annual salary figure was £75,000, then by using the retained profits you’d be able to borrow more money because it’s a higher figure.

By borrowing more money, you can look at higher value properties. All through using your retained profits rather than your income and dividends.

How can I get a lender to accept my retained profits to get a larger mortgage?

Not all mortgage lenders will accept retained profits as a way of getting a mortgage. You’ll almost certainly have to apply to a specialist lender. Specialist lenders aren’t the big names you see on the high street, and they won’t turn up in your online searches.

In order to find one of these lenders, you need to work with a specialist mortgage advisor. Advisors have the relationships and knowledge of dealing with situations like yours so will know which lenders to approach. This will save you a lot of time and, potentially, some money too.