Retained Profit Mortgage
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Retained Profit Mortgage
Joe Joyce explains how a company director can use retained profits for a mortgage.
Podcast approved by The Openwork Partnership on 28/01/2026.
What is a retained profit mortgage, and how does it work?
A retained profits mortgage is an option for limited company directors. It tends to be those with a shareholding of 50% or more, although some lenders allow less.
Essentially, we can use the director’s percentage of the profits for affordability instead of the dividends they’ve taken. The process can also be known as ‘share of net profit’.
Am I eligible if I keep profits in my business instead of drawing them as income?
Yes, and it’s quite common for limited company directors to do that. They’ll often leave money in the business for growth, or because they don’t necessarily need to take it as personal income, and that will increase their tax liability in most cases.
It’s just another way that lenders can look at potential income and give you more flexibility.
How do lenders assess retained profits when calculating affordability?
To look at retained profits, we’ll need copies of your company accounts – normally provided by your accountant.
It’s usually fairly straightforward to get those. Net profit is the profit after corporation tax, and that’s the figure that lenders use. They’ll take your percentage of ownership into account. If you take a director’s salary, normally entitled ‘directors’ remuneration’ in the accounts, this can be added on top, as well.
Be aware that some lenders want two years of accounts and may take an average of those figures. It’s worth talking to us in detail about what you’re looking to achieve.
Do I need an accountant’s certificate to prove retained profits?
Not always. It depends on the lender and their specific criteria. Some lenders purely want the accounts themselves, whereas others will want a completed accountant’s certificate as well.
Some lenders only want an accountant’s certificate. Each lender requires specific documents, so that’s always worth talking through in detail.
Will all lenders accept retained profits for mortgages?
Selective lenders will accept retained profits over dividends. It’s always advisable to talk to a mortgage adviser with experience about which specific lenders will use retained profits, or won’t.
Can retained profits be used alongside salary and dividends for affordability?
They can be used alongside salary, but not dividends. It’s an either/or situation. Depending on your specific figures, we’d look to use the salary and the profits or the salary and the dividends – whichever maximises your potential borrowing or gets you to the figure you need.
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How many years of business accounts do I need to show?
It does vary from lender to lender. To have as many options as possible, we advise having at least two years’ worth of accounts. However, if you’ve only got one year’s worth, certain lenders will potentially accept those. It’s always worth talking through in detail and seeing what your options are.
Do lenders look at net profit, gross profit or both?
The majority of lenders go off net profit when assessing your affordability. A very few can use gross profit for affordability. In order to do that, you’ll need to be a 100% shareholder. Again, we can approach specific lenders for your circumstances.
How does using retained profits affect the Loan-to-Value I can borrow?
There’s no real restriction. It’s not that retained profit gets you a maximum Loan-to-Value. It’s just like any other employed mortgage, and so the minimum deposit in most cases is 5%.
Your deposit could be governed by affordability – you might find you need a 10% deposit, for example. Determining your affordability helps us look at what deposit you may need to bridge that gap to your purchase price. But in most cases, a 5% deposit is the starting point.
Are interest rates or fees higher for retained profit mortgages compared to standard self-employed mortgages?
No. The interest rate is governed by your Loan-to-Value.
You’ve demonstrated this throughout the episode, but how can a mortgage broker help here?
Get in touch and talk this through in detail. The more information we have from you, the better we can do our job and give you the most accurate advice.
Key Takeaways:
- A Retained Profit Mortgage is an option for limited company directors, particularly those with a 50% or greater shareholding, allowing lenders to use the director’s percentage of the company’s profits for affordability instead of the dividends they have taken.
- Lenders primarily use your percentage of the company’s net profit (profit after corporation tax), which can be added on top of your director’s salary. It’s an either/or situation: retained profits can be used with salary, but not alongside dividends.
- To assess affordability, lenders require copies of your company accounts (usually provided by your accountant). While some lenders may accept one year, it is generally advised to have at least two years’ worth of accounts for the most options. Some lenders may also require a completed accountant’s certificate.
- Using retained profits does not impose a special maximum Loan to Value (LTV) restriction; the minimum deposit is typically 5%, similar to an employed mortgage. However, your personal affordability may ultimately govern whether you need a larger deposit (e.g., 10%) to bridge the gap to the purchase price.
Approved by The Openwork Partnership on 28/01/2026.