Self-Employed Net Profit Mortgage

Can you use projected income to get a mortgage?

You can’t use projected income to get a mortgage, but you can use it to solidify the reasons why the lender would lend to you.

A good example of this would be if you have a net profit one year of £50,000 and then the following year’s profit is £200,000 and you’re looking for a lender to use the most recent year. Sometimes there needs to be a valid reason as to why it’s increased so much and whether it’s sustainable going forward.

If you’ve got an accountant’s letter that will back up your story as to why your business has grown, why the income is going to be sustainable, and what your projected net profits are for the following year, it won’t increase the amount you’re borrowing; however it can solidify the case as to why they should lend to you based on your current income.

Is there a maximum loan-to-income (LTI) ratio when using net profit?

This depends on the lender, as every lender has its own risk criteria when it comes to self-employed individuals.

Some lenders will have a cap of 4.5 times loan-to-income ratio. There are other lenders out there that can lend up to five and a half, potentially even six, depending on how much income you have been earning.

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

Many lenders have a minimum income threshold – this doesn’t apply only to self-employed individuals.

For example, if a lender’s minimum income for an application is £15,000, the application would be declined if you don’t meet that minimum income criterion, regardless of whether you are employed, self-employed, or on benefits.

However, if you earn only £10,000 but your partner earns £50,000, your income being below that threshold does not preclude its use, but the overall application needs to be up to a certain level.

Are there different requirements for sole traders vs. limited company directors?

If you apply for a mortgage as a sole trader, the income you declare on your tax calculation and tax year overview from your business will naturally be the profit after your expenses. This automatically shows as your net profit.

However, if you are a limited company director, where the company is assessed as a separate legal entity, your personal income will be classified as salary or dividends, not net profits. Then you’ve got the net profits that the business earns.

So, if we’re looking at this question from a net profit standpoint, for sole traders, the way your income is declared is naturally already your net profits. But if you’re running it for a business, it’s the net profit of the business rather than you as a person.

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

If you operate under multiple businesses and are looking to use net profits, it depends on each lender’s criteria.

For example, if we’re looking at a lender that takes the average of your last two years’ worth of accounts, and you own 100% of three businesses, they would simply consider your share of the average net profits from the last two years for each business.

Each business is assessed completely independently. Whether you’re looking at one year’s accounts or two years’ accounts, depending on the lender, they just look at the net profit or your share of the net profits for that individual business when you’re making the application.

How can a mortgage broker help?

So, I think there’s a massive misconception that it’s very difficult, and near impossible, to get a mortgage when you’re self-employed.

This rumour gets spread around because people will speak directly to their bank, which is not geared up for people who run businesses or want to use net profit for their application.

Speaking to a broker with expertise and knowledge in this area – who regularly deals with multiple lenders that specialise in limited company owners using net profits – will save a lot of headaches. This will usually get you a bigger borrowing amount than going to a bank that will just assess your tax calculations and tax overviews, and what you’ve taken from the business.

It’s always worth speaking to a broker with that experience, because if one bank says no, or your income is geared up a certain way, they’re going to know what kind of lenders to look at for you.

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

Approved by The Openwork Partnership on 23/09/2025.