Remortgaging after going limited

If you've switched from sole trader or employment to a limited company, remortgaging is the moment to move to a lender that reads a director's income correctly. The catch is that most lenders assess you on salary plus dividends — the small, tax-efficient figure you draw — while a select group also count retained profit left in the company. The right lender can assess your true earning power and lend substantially more, so going limited needn't shrink what you can borrow.

Why does going limited change your remortgage?

Answer first: because it changes how your income looks on paper. As a director you typically pay yourself a small salary plus dividends and leave the rest as profit in the company, all for legitimate tax efficiency. Most lenders assess you only on that drawn salary and dividends — so your assessable income suddenly looks far smaller than your business actually earns.

This is the classic limited-company trap. The very tax-efficiency your accountant arranged makes you look like a low earner to a lender reading your personal tax return. At remortgage time, a lender stuck on that figure offers a low cap or a weak rate, and directors assume incorporation has cost them borrowing power. With the right lender, it hasn’t. The general remortgage process is in how to remortgage; this guide is about the director-specific income piece.

How do lenders assess a director’s income?

There are two broad approaches, and the gap between them is enormous.

The common approach counts your salary plus dividends — the money you actually drew personally. For a tax-efficient director that’s deliberately modest, so it understates your earnings.

The better approach for many directors counts salary plus your share of retained profit — the post-tax profit left in the company. Only a select group of lenders do this, but it reflects what your business genuinely earns, not just what you chose to extract. For a director who retains profit, switching from the first basis to the second can more than double the income a lender will work from. This is the same principle set out for purchases on our limited company directors page — and it applies just as much when you remortgage.

What if your contract income is the real story?

Many directors are also contractors — running a personal company through which they invoice day-rate work. For them, an even better route can be contract-based underwriting: the lender reads the current contract and annualises the gross day rate, rather than wrestling with company accounts at all.

Which basis is best — salary and dividends, retained profit, or contract income — depends on how you trade and what your figures look like. Part of a broker’s job is working out which of these produces the strongest, accurate result for you, then choosing the lender that lends on it.

Can you remortgage if you only recently incorporated?

Often yes. The “you need two or three years of company accounts” rule is true for some lenders, but not all. Others will assess a recently incorporated director on a current contract, one year’s figures, or continuous experience in the same field before incorporating — recognising that the business is new but the person and their work are not. If your company history is short, remortgaging on one year’s accounts sets out the routes.

So a recent switch to limited needn’t force you to wait years before remortgaging well. The lenders comfortable with a short history exist; the task is finding them.

How does the switch work in practice?

It’s a standard remortgage, with one decisive variable: lender choice. You compare the market ahead of your deal end date, apply with your evidence ready — typically your accounts or accountant’s reference, salary and dividend figures, retained-profit figures where relevant, your current contract, and recent bank statements — and complete the new deal as your old one ends. The document checklist breaks this down by structure.

Because the right income basis and the right lender are everything here, this is a case where whole-of-market advice changes the outcome materially, not marginally.

The bottom line

Going limited needn’t shrink what you can borrow at remortgage — it only does so if you stay with a lender that counts just your small salary and dividends. The right lender counts retained profit, or reads your contract via contract-based underwriting, and assesses your true earning power. If you’ve recently become a director, the end of your deal is the moment to switch to a lender that sees the whole picture. To find the lender and the income basis that lend you the most, speak to an adviser.