Mortgages for Business Owners

With the right advice, business owners often have far more options than they expect.

An important and often overlooked part of this planning is Relevant Life Cover, which can significantly improve tax efficiency and personal finances.

If you own more than 25% of a limited company, lenders will typically assess your income in one of two ways:

Personal income route -

Based on your personal tax return, including PAYE salary and dividends.

Company accounts route -

Using PAYE salary plus your share of the company’s net profit, as shown in the business accounts.

Different lenders use different methods, which is why specialist advice can be crucial.

Many business owners do not withdraw all available profits. Retaining funds in the business is often essential for cash flow, stability, and growth.

Some lenders understand this and are willing to include retained profits when calculating affordability, recognising that these funds could be drawn if needed. This can materially increase borrowing potential and expand the range of suitable mortgage options.

Mortgage affordability is closely linked to how tax-efficiently your business and personal finances are structured. Adjusting how income is taken, salary, dividends, or retained profit can affect how lenders view your earnings.

This is why a joint conversation between your accountant and mortgage adviser is so valuable. Planning ahead can ensure your business structure supports both tax efficiency and your future home-buying plans.

 

One of the most effective ways for business owners to improve tax efficiency is through Relevant Life Cover.

A Relevant Life Policy allows your business to pay for your personal life insurance, rather than you paying for it privately. This offers several key advantages:

 

While life insurance itself doesn’t increase how much you can borrow, Relevant Life Cover can strengthen your overall financial position. Lower personal expenses, improved tax efficiency, and clearer financial planning all contribute to a stronger mortgage application.

From a lender’s perspective, well-structured finances demonstrate stability, sustainability, and forward planning. Qualities that are always viewed positively.

Being a business owner doesn’t limit your mortgage options, it simply means your finances need to be looked at in the right way. Understanding how lenders assess income, how retained profits can be used, and how tools like Relevant Life Cover can improve tax efficiency can make a meaningful difference.

If you’re a business owner considering a mortgage, speaking with an adviser early can help ensure your business works for you (not against you) when it comes to buying your next home or refinancing your current one for home improvements.