Self-Employed Net Profit Mortgage

Can you use projected income to get a mortgage?

Generally, lenders use your historical income rather than projections, but perhaps you’re newly self-employed with a history of being employed in the same line of work. If you can demonstrate signed contracts with clients, it could be possible.

Usually you need an accountant to review it and present that in a reference to a bank. Some lenders could take that.

Or, you might be self-employed in a professional role like a vet or a doctor, and you’re part of a professional body. In those particular professions, strong evidence of pipeline work and an accountant’s reference could be used for a mortgage application.

Using projections is rare, though. It’s normally based on historic income earned with tax paid.

Is there a maximum Loan to Income ratio when using net profit?

Yes. Every mortgage lender has their own Loan to Income cap. When you cross certain thresholds, the cap can increase. Very high income earners might be able to borrow up to six times the income.

However, most mortgage lenders cap at around 4.5 times income. High Loan to Income deals are very restricted and will be subject to affordability stress testing. If you’re hoping to borrow six times your income, you can expect the lender to be very stringent on how they calculate that.

Are there any minimum income thresholds for self-employed applicants?

If you’re the only borrower on an application, some lenders want to see a £15,000 minimum income – but that doesn’t go very far these days. Even if you’re buying a very cheap property in the north of England, you’ve still got bills and food – so £15,000 wouldn’t stretch to much of a mortgage.

Other lenders set a minimum income of £20,000 or £25,000, because you’ve got to be able to sustain your outgoings as well as the borrowing. Big loans may also require a minimum household income. Lenders will be more cautious where incomes look very low.

Are there different requirements for sole traders versus limited company directors?

A sole trader is assessed for a mortgage based on the net profit. A limited company director is normally assessed based on the salary and dividends they draw out of the company.

Many limited company directors own their business entirely with a 100% share, but to use salary and dividends lenders generally require at least a 20% or 25% shareholding. If your share is less than that, you might not be able to use salary and dividends.

Some mortgage lenders can actually use the salary plus the share of any net profits in the business, which can sometimes give you a bigger figure. That’s particularly useful if you’re a director of your own company and you only draw out what you need to survive, leaving a lot of money in the business.

That’s potential income you could draw on if you need to. Some mortgage lenders can lend based on that potential income, and we call that retained profit. The required documentation differs slightly – a company director will need to provide company accounts, whereas for a sole trader, it’s your personal tax returns.

If I operate under multiple businesses, how do you assess total income?

If you’ve got multiple businesses and you’re a sole trader in all of them, your accountant would combine all that income onto your tax return, so you would have one total figure as your net profit.

So, having income from multiple businesses is fine as long as it’s showing on your self-assessment. But each income needs to be evidenced and sustainable. There’s no point in using an income from a job you’re no longer doing.

Also, if the businesses are connected together – maybe it’s a group of companies, for example – the overall trading outlook of that group will also be assessed. Having clear, concise, accurate accounts, plus an accountant’s reference, will give the lender comfort about the long-term sustainability of your business.

What else do we need to know about a self-employed net profit mortgage?

A mortgage broker will match a client to the right lender – one that understands their self-employed income. It’s our job to present the case in the right way, which we call ‘packaging.’

We package your case correctly for how that lender wants to see it, which will avoid unnecessary delays or declines.

We also manage you through the application, make sure that everything is running smoothly, and deal with any underwriting queries as they come up. A mortgage broker can often answer those without going back to a client, because we understand how you run your business, your income and your outgoings.

Key Takeaways:

• For self-employed applicants, a bank calculates mortgage income based on net profit, which is your turnover after business expenses but before personal tax is paid.
• Lenders typically require documentation of net profits for the last two years, such as SA302 forms and corresponding tax year overviews, and generally take an average of the two years, or the lowest year if profits are declining.
• Affordability calculations factor in your net profit alongside non-cancellable monthly commitments like loans, credit cards, finance agreements, and financial dependents.
• The assessment method differs for business structures: sole traders are assessed on net profit, while limited company directors are normally assessed on salary and dividends drawn from the company.
• The maximum Loan to Income ratio is often capped at around 4.5 times income for most lenders, although some may offer higher multiples (up to 6.5 times) for high earners or applicants with a strong credit history and stable income.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

For specialist tax advice, please refer to an accountant or tax specialist.

Approved by The Openwork Partnership on 16/03/2026.