Retained profit mortgages, explained
A retained profit mortgage lets a limited company director borrow against the profit left inside the company, added to their salary — instead of being capped at salary plus dividends. For tax-efficient directors, it can more than triple the borrowing a standard assessment allows.
The problem it solves
Most directors take a low salary and modest dividends, leaving surplus profit in the company to defer tax. It’s sensible planning — but a standard lender reads only what you personally drew, so your declared income looks small and your borrowing is capped to match. The money is plainly there in the business; it just isn’t being counted.
What counting the profit unlocks
Salary + dividends declared: £40,000
Standard assessment at 4.5×: ≈ £180,000
Retained-profit assessment at 4.5×: ≈ £585,000
Indicative figures — the exact amount depends on the lender, your accounts and affordability.
How lenders assess it
There’s no product literally called a “retained profit mortgage”. Instead, a select group of lenders apply criteria that let an adviser use your share of net profit in place of dividends. They generally:
- Average your director’s share of profit over one to two years, where stable or rising.
- Require accounts signed off by a qualified accountant, often with an accountant’s reference.
- Apply a 4.5× multiple as standard, sometimes higher for stronger profiles.
- Confirm the company genuinely held the profit claimed — they lend on substance.
- Only a minority of lenders count retained profit — but they exist and they matter.
- It can roughly triple borrowing versus a salary-and-dividends assessment.
- You’ll need finalised accounts and usually an accountant’s reference.
- It’s normally an alternative to dividends, not added on top — pick the stronger route.
Who it suits
Established directors who leave profit in the business, and contractors trading through their own company who could be assessed either on day rate or on profit. See the limited company directors page for how we approach it, and why the SA302 alone holds you back.
Because the right lenders are few and their criteria shift, placement matters more here than almost anywhere in contractor lending. Speak to an adviser before applying.
To see the size of the gap on your own numbers, put your salary, dividends and company profit into the retained profit calculator — it sets the drawn-income basis most lenders use against the profit basis a specialist would apply.
Retained profit mortgages, answered
What is a retained profit mortgage?+
It’s a mortgage where the lender assesses your share of the profit left in your limited company, alongside your salary, instead of limiting you to salary plus dividends. It can dramatically increase borrowing for directors who retain profit for tax reasons.
Which lenders use retained profit?+
Only a minority — but enough to matter. Their criteria differ on how many years they average, whether they need an accountant’s reference, and the multiple they apply. Choosing the right one first avoids wasted credit searches.
How much can I borrow on retained profit?+
Typically your salary plus your share of net profit, multiplied by 4.5× (sometimes more). A director with £130,000 of company profit could see borrowing near £585,000, versus around £180,000 assessed on a £40,000 SA302.
What do I need to provide?+
Usually one to two years of finalised accounts, an accountant’s reference confirming profit and your shareholding, SA302s and Tax Year Overviews, and business and personal bank statements.
Is it better than salary plus dividends?+
It depends on your figures — and with most lenders it’s one or the other, not both. The right choice is whichever produces the higher sustainable figure. A broker compares both routes across lenders.