Getting a mortgage as a sole trader vs a director 

Getting a mortgage as a sole trader vs a director 

It’s a well-documented fact that obtaining a mortgage if you are self-employed, can be a tad more tedious than if you were employed. Nevertheless, it certainly is possible and the same products are available to you!  

In this article, we explore the difference in obtaining a mortgage for sole traders vs directors. 

Getting a mortgage as a sole trader 

Each lender will vary on their requirements, however, most banks will ask for copies of your SA302’s for the last two years self-assessment tax returns.  

Most lenders, not all, will only approve your mortgage if you have been trading for at least 24 months to get a good sense of your income and your business’ overall health. 

Alongside your SA302’s, the lender will also ask for: 

  1. Bank statements showing your income, or a profit and loss report 
  1. Proof of your deposit (if purchasing a property – does not apply for remortgage applicants) 
  1. Passport/driving license – for an ID check and proof of address 
  1. Any debts/loans you have outstanding 
  1. Household bills  

Getting a mortgage if you are a director of a limited company 

The requirements for directors are similar to sole traders, you will still need to prove your income through your SA302’s, bank statements or payslips, and provide details of any outgoings you may have. 

Where this differs, is that your company has a separate legal personality. When you own a limited company, the money you earn belongs to the company, not you. To get money out of the company, you will need to pay yourself a salary and dividends. 

Many people who work this way, pay themselves small salaries and the rest of their income as dividends, as this is the most tax-efficient way.  

At the same time, how much money you pay yourself as dividends is a matter of personal preference — you could take all the profit out of the company every year, or a smaller portion that’s just enough to cover your living expenses. 

If you do the latter, the bank may not regard your income as sufficient to meet their affordability criteria. This means you could either have your application rejected or be able to borrow less than you were hoping. But that’s not entirely accurate. Any profit you haven’t taken from your company is still technically available for you to withdraw if you want to. 

So, what are your options? 

  1. Take more money out of your company 
  1. We can find a lender who will consider your retained/net profits as income 
  1. Borrow with your significant other 

What do lenders look for when processing a mortgage application? 

Lenders will look at one thing before approving your mortgage application; will you be able to repay it? 

They will look at your income, your expenses and work out whether you would be able to comfortably afford the repayments on your mortgage. 

Why go anywhere else for your Mortgage? Start today and experience Mortgagez for yourself. Find out now how much you can borrow for your property purchase or save on a remortgage by clicking below. 

I want to remortgage → Mortgagez | Remortgage Calculator  

I want to buy a home → Mortgagez | Instant Online Mortgage Calculator 

PLEASE NOTE: Article written 6th September 2023. Information contained within this article is likely to change and therefore should not be relied upon or form part of any form of decision making without seeking professional advice. * 


Any guidance and/or advice contained within this document is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK. Any technical or regulatory information contained within this document was correct at the time of producing it but as it may be subject to change it should not be exclusively relied upon when making a financial decision. The Financial Conduct Authority does not regulate advice on Buy to Let mortgages.  

Article written: September 2023                                                                                                        060923 MZ000279 

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