One of the most damaging myths in today’s mortgage market is the idea that if a director pays themselves £12,570 per year, that is all a lender is prepared to recognise as income. Business owners hear this from friends, online forums and, all too often, from brokers who only know how to read a tax return. The result is the same: successful entrepreneurs are told they “cannot afford” the very properties their own businesses comfortably subsidise.

In 2025, that view is simply wrong. Across specialist lenders, private banks and more progressive high-street names, underwriting for business owners has shifted decisively towards business performance, not just personal drawings. Net profit, retained earnings, the consistency of income and the strength of the underlying company are central to how many lenders now assess affordability.

This evolution sits alongside wider changes in the market. Directors are increasingly using corporate structures for property ownership, whether through SPVs or wider group entities. Blogs such as Limited Company Mortgages Explained and UK Property Finance for Entrepreneurs in 2025: Balancing Business Cashflow and Borrowing already highlight how structures influence outcomes. The same logic applies to how lenders read business-owner income.

For self-employed clients who operate outside traditional employment, the shift is even more pronounced. As explored in Mortgages for Self-Employed Borrowers in 2025, lenders now recognise a much broader range of income patterns and documentation. When the borrower is a director or shareholder in a profitable business, the gap between “reported income” and “real borrowing power” can be significant.

This guide sets out how lenders really assess business owners’ income in 2025, why the £12,570 narrative belongs in the past, and how directors can present their finances in a way that aligns with how the best lenders think.

Market Context in 2025

The 2025 lending landscape is more cautious than in past low-rate cycles, but it is also more sophisticated. Lenders are acutely aware of economic volatility, regulatory scrutiny and the need to evidence robust affordability. This does not mean less appetite for business owners; it means more structured, evidence-based underwriting.

High-street banks still rely heavily on standardised processes. They often default to personal income shown on SA302s, payslips or declared dividends. For straightforward cases this can work, but it quickly breaks down where income is managed for tax efficiency or flows through multiple companies and SPVs.

Specialist lenders and private banks, by contrast, are far more comfortable with entrepreneurial income. Many of them already deal daily with corporate groups, cross-border structures and complex remuneration packages. For these lenders, it is entirely normal to see profit retained within a trading company or to see directors drawing less than they could for sensible commercial reasons.

As a result, the market has split. Borrowers who approach the wrong bank, or who rely on brokers unfamiliar with complex income, still hear the same limiting message about their “£12,570 income”. Those who are properly advised and matched with appropriate lenders find a very different reality.

Why the £12,570 Salary Narrative Is Wrong

The £12,570 figure is often anchored to income tax thresholds and basic planning. It is a tax decision, not a reflection of capacity to earn. Directors structure their drawings to optimise tax, build company reserves, protect cash flow or retain funds for reinvestment. None of those decisions mean the underlying business cannot support a higher level of borrowing.

Consider two directors. Both draw £12,570 in salary. One runs a marginally profitable business. The other runs a company generating £400,000 net profit annually with strong cash reserves and minimal debt. Treating both directors as having the same borrowing power is clearly illogical, yet this is effectively what happens when lenders and brokers rely only on payslips or self-assessment summaries.

Modern underwriting asks a much more relevant question: “What level of income could this director safely draw without compromising the business?” That question can only be answered by reviewing accounts, profit trends, retained earnings and liquidity. When those elements are analysed properly, the director’s salary becomes only one small part of a much broader picture.

In other words, the issue is not that business owners lack income. The issue is that too many applications are framed as if they do.

How Lenders Really Assess Business Owners’ Income

When lenders take business-owner income seriously, they start with accounts, not just tax returns. The analysis is multi-layered and tailored to the structure of the company or group.

First, underwriters examine net profit before tax. This is often the cornerstone of any assessment because it reflects the business’s genuine earning power before decisions about how much to distribute. A company consistently generating six-figure profit can support higher personal drawings than one operating on thin margins, even if both currently pay the director a modest salary.

Retained earnings sit alongside profit as a core indicator. Accumulated profits that remain within the business show that income has been generated and, crucially, that it has not had to be extracted to keep the director afloat personally. In practice, this gives lenders confidence that there is scope to draw more if required to service a mortgage, without destabilising the enterprise.

Director’s loan accounts are another powerful indicator. Many directors introduce capital into their company or leave drawings outstanding on loan account. Positive balances can often be withdrawn without tax consequences. Lenders who understand this will treat these balances as part of the wider income and wealth picture, rather than ignoring them in favour of a simplistic salary figure.

Sophisticated lenders also make targeted adjustments—adding back non-cash expenses such as depreciation and amortisation, or excluding genuine one-off costs that depress a single year’s profit but do not reflect ongoing affordability. Where appropriate, they may consider normalised earnings that strip out extraordinary items.

Finally, there is the question of trend and resilience. Underwriters look for evidence that profit is stable or growing, that cash flow is well managed and that the business is not excessively leveraged. A growing business with improving margins and strong cash balances is a very different proposition to a company surviving on volatile, thin profits, even if the directors currently pay themselves identical sums.

When Retained Earnings and Profit Matter More Than Drawings

For many directors, the most important shift in 2025 is the recognition that what matters is not what has been drawn, but what could reasonably be drawn. Businesses with strong profits and substantial retained earnings represent latent personal income capacity.

A director might have chosen to draw £50,000 per year while leaving £250,000 in the business. To an underwriter who only considers personal income, this director looks like a mid-level earner. To a lender who understands corporate structures, the business clearly supports a much higher level of borrowing, particularly if the net profit figure is consistent over several years.

This is why content such as Directors’ Remuneration & Retained Profits: Smarter Borrowing for Ltd Company Owners in 2025 is so important. It explains how drawings strategy and lending strategy need to be coordinated. The core message is simple: borrowing power is anchored to what the business delivers, not merely what happens to have been taken out in a particular tax year.

Seen this way, low drawings cease to be a limitation and become a signal of choice and prudence. For the right lenders, that is attractive, not negative.

How Private Banks and Specialist Lenders Go Further

Private banks and higher-end specialist lenders often operate in a completely different universe to mainstream retail banks. Their entire model is built around understanding complex financial lives, and business owners are central to that.

Rather than relying only on historic figures, private banks look at EBITDA, cash flow, balance sheet strength, debt serviceability, forward contracts, order books and, where appropriate, forecasts signed off by accountants. In some cases, multi-year averages are used. In others, the latest year’s performance is given greater weight because it better reflects where the business now stands.

For high-net-worth directors or those with substantial global wealth, private banks may also factor in investment portfolios, offshore assets, securities-backed facilities and other non-standard sources of liquidity. This approach is explored further in blogs such as Private Bank Mortgages Explained: Benefits and Drawbacks and Private Bank Mortgages for Entrepreneurs: Balancing Business Assets and Borrowing in 2025.

The practical effect is that a director who appears constrained when viewed through a basic high-street lens can be seen as a strong candidate under a private bank model. The key is matching the client to the right type of lender and presenting the business in a form that aligns with that lender’s methodology.

Common Challenges Business Owners Face

Despite the progress in lender thinking, business owners still run into predictable problems when they apply for mortgages.

One recurring issue is poor presentation of accounts. If profit, retained earnings, loan accounts and adjustments are not clearly articulated, underwriters default to the simplest interpretation. That often means viewing salary and dividends as the full picture, even when the accounts would support a more generous assessment.

Another challenge arises where borrowers operate multiple companies, SPVs or group structures. Income may be spread across entities, or profits may arise in one company while another holds assets or contracts. Without careful consolidation and explanation, lenders may struggle to connect the dots and may under-estimate the director’s real position.

There is also the problem of lender selection. Business owners are frequently guided towards familiar high-street brands, even where those lenders are known to be conservative with complex income. In contrast, specialist lenders and private banks might be comfortable with exactly the same fact pattern.

Finally, some accountants remain cautious when asked to provide adjusted or certified income figures. Their role is not to engineer borrowing, but if they are not aligned with the structuring plan, opportunities can be missed.

What all these challenges have in common is that they are process issues, not income issues. The numbers are often strong enough; they are simply not being used to their full potential.

Strategies to Increase Borrowing Power in 2025

In 2025, directors who want to maximise their borrowing power need to approach mortgage planning with the same rigour they bring to their businesses.

A good starting point is to ensure the latest set of accounts properly reflects the current strength of the business. Where profit has grown significantly, lenders that accept the most recent year alone can be particularly valuable. Where there have been one-off costs, these should be identified and, where appropriate, separated out to show a “normalised” earnings level.

It is also important to prepare supporting commentary and, in some cases, accountant-certified income calculations. These might summarise average profit over a number of years, normalise EBITDA, or document the rationale for treating retained earnings and loan accounts as part of affordability. Lenders respond well to clear, professional explanations backed by evidence.

For directors who hold property within companies, content such as SPVs vs. Trading Companies: What Landlords Must Know in 2025 can be a useful reference when thinking about how different entities interact. Understanding how lenders stress test limited company borrowing compared to personal borrowing helps ensure that group-wide cash flow is presented in a way that supports the case, rather than confusing it.

Above all, lender selection is critical. There is little value in polishing accounts only to place them with a lender whose policy dictates a narrow interpretation of income. The most successful directors work with brokers who know which lenders are prepared to take a profit- and balance-sheet-based view and who have experience presenting complex income in that format.

Hypothetical Scenario Insight

A common pattern in the current market involves a director who has deliberately kept personal drawings low while scaling a highly profitable business. On paper, their self-assessment may show relatively modest income, but the company’s accounts tell another story.

Imagine a consultancy generating £220,000 net profit each year and building retained earnings of £300,000, while the director pays themselves £25,000 salary and £30,000 dividends. A mass-market lender might assess affordability on £55,000 of income and decline a higher-value application. A lender comfortable with business-owner underwriting is far more likely to focus on the £220,000 profit figure, the retained surplus and the robust cash position.

In practice, this can be the difference between being constrained to a smaller property and comfortably financing the kind of home or investment asset the business can clearly support. The key distinction is not the numbers themselves, but how they are interpreted.

Outlook for 2025 and Beyond

The direction of travel is clear. As more directors adopt sophisticated tax planning and corporate structures, lenders that cling to simplistic income metrics will become less relevant for serious business owners. Specialist lenders and private banks that understand entrepreneurial income are already gaining market share in this space.

For directors, this creates both opportunity and responsibility. The opportunity lies in securing lending that genuinely reflects their success, rather than their tax optimisation. The responsibility lies in ensuring that borrowing decisions are sustainable, well-structured and integrated with wider wealth planning—particularly where company structures, family trusts or international elements are involved.

In the years ahead, the most successful borrowers will be those who treat income presentation as part of strategic planning, rather than an afterthought at the point of application.

How Willow Private Finance Can Help

Willow Private Finance works extensively with business owners, entrepreneurs and high-net-worth clients whose income does not fit standard, PAYE-style templates. The firm understands how to read accounts, interpret complex structures and align business performance with lender expectations.

Whether arranging finance with a specialist lender willing to use latest-year profit, or coordinating a private bank relationship that looks at EBITDA, retained earnings and wider asset positions, Willow’s role is to ensure that applications reflect the real strength behind the director—not just their current drawings. For clients who already have SPVs, group structures or cross-border assets, Willow can also connect this work with wider strategies explored in blogs such as Private Client Finance in 2025: Tailored Lending for Complex Profiles.

The result is a more accurate view of what is genuinely affordable and a better fit between lender, structure and long-term objectives.

Frequently Asked Questions

Q1: Do lenders really ignore my £12,570 salary in 2025?
Many progressive lenders do not treat a low director salary as the full measure of your income. Instead, they look at company profit, retained earnings and the broader financial strength of your business to assess what you could reasonably draw without harming the company.

Q2: Can retained earnings help me borrow more?
Yes. Retained earnings can be a powerful part of the affordability story, especially where they reflect consistent profit and prudent cash management. Lenders who understand business-owner income often view retained profits as evidence that the company can support higher drawings if needed.

Q3: Do I always need two years of accounts to be considered?
No. Some lenders, particularly in the specialist and private bank space, will base their assessment on the latest year of accounts where that year clearly shows improved performance. This can be particularly helpful for fast-growing businesses or those that have recently restructured.

Q4: Will lenders consider group structures and multiple companies?
Many will, provided the structure is properly explained and evidenced. Underwriters may look at consolidated profit, cash positions and inter-company relationships to build a picture of your overall income capacity across the group, rather than treating each company in isolation.

Q5: How do lenders treat low dividends in affordability calculations?
Low dividends are usually seen as a tax and cash-flow decision, not a cap on your real earning power. Where the accounts show strong profit, many lenders will base their assessment on the business’s performance rather than on the specific level of dividends taken in a given year.



Q6: Can private banks really offer higher borrowing for business owners?
Often yes. Private banks use more sophisticated underwriting, including EBITDA, forecasts and wider asset positions such as investment portfolios or securities-backed lines. For the right client, this can translate into materially higher borrowing and more flexible structures than standard retail lending.

📞 Want Help Navigating Today’s Market?

Book a free strategy call with one of our mortgage specialists.

We’ll help you find the smartest way forward—whatever rates do next.