A successful first year in business can leave a borrower with the income to support a mortgage but too little trading history for some lenders. Principality Building Society has widened access to a range designed to address that gap, with borrowing available up to 90% of a property’s value.
Limited-company directors can apply with one year’s accounts, sole traders with one year’s tax calculations and eligible Construction Industry Scheme workers with six months’ payslips. The products include two- and five-year fixed rates, with both fee-paying and fee-free options.
The expansion, reported on 4 November, follows a soft launch in late April. Principality says the earlier phase has already helped almost 300 borrowers. This is a broader rollout of an existing proposition, bringing renewed attention to cases that may previously have been put on hold.
For a business owner waiting for a second set of accounts, that could mean revisiting a home purchase sooner. For an established homeowner who has recently become self-employed, it could open another conversation about refinancing.
A short business history can delay a perfectly plausible move
Consider a consultant who left employment 14 months ago to establish a limited company. The first accounts are complete, the business has paying clients and the director wants to buy a family home.
Where a lender requires two years’ accounts, the application can stall before there is a useful discussion about the proposed mortgage. The obstacle is the length of the record available, even if the first year’s figures are encouraging.
That waiting period can affect more than a moving date. A buyer might continue paying rent, postpone a purchase near a new school or find that a suitable property has sold by the time another accounting year is available.
A one-year route allows the case to be assessed earlier. The lender still needs to be satisfied that the income supports the borrowing, but the borrower is no longer excluded simply because a second set of accounts does not yet exist.
The accountant and mortgage adviser can establish whether the first accounts cover a complete trading year and reflect the business as it now operates.
Different routes for directors, sole traders and construction workers
The range recognises that self-employment does not produce one standard set of documents. A director, a sole trader and a CIS worker may earn similar amounts while presenting very different evidence.
| Applicant | Core income evidence | Published maximum LTV |
|---|---|---|
| Limited-company director | One year’s accounts or an appropriate accountant’s certificate | 90% |
| Sole trader | One year’s tax calculations, with supporting tax year overview where required | 90% |
| Eligible CIS worker | Six months’ CIS payslips and supporting evidence | 90% |
Principality’s standard criteria generally ask directors and sole traders for a longer record. The dedicated range is therefore important when assessing a borrower whose available evidence falls short of that standard route.
The expansion does not mean every self-employed application can now proceed on the same basis. It means there is a specific option to consider when the trading history is the main difficulty.
For directors, the income figure matters as much as the accounts
The lender’s published product guidance says it uses salary and dividends for directors. A profitable company can therefore still produce a different mortgage assessment from the one its owner expects.
A director may leave money in the business to fund recruitment, equipment or working capital. Those funds can be valuable to the company without being automatically interchangeable with the personal income used in this mortgage calculation.
Take a director drawing £20,000 in salary and £45,000 in dividends. The starting figure on that basis is £65,000, before the lender’s assessment. It would be misleading to add the company’s turnover or bank balance and treat the total as personal earnings.
For sole traders, the distinction is between sales and profit. A business with substantial revenue may also have considerable costs. Principality’s income guidance uses net profit for this assessment, so the amount invoiced alone does not establish borrowing capacity.
That is why the accountant’s contribution can be useful early. Clear figures help identify a suitable lending route before a borrower begins negotiating around an assumed budget.
CIS workers have a separate route through the paperwork
Construction workers paid under CIS can face a different problem: regular earnings may be visible in payment records without resembling a conventional salaried job or a long-established business.
Principality’s dedicated CIS product accepts six months’ payslips alongside three months’ bank statements. Applicants also need 12 months’ relevant industry experience and evidence of continuing work. Its published conditions cover continuity and gaps between contracts.
The bank calculates annual income using a 48-week basis. That makes the recent payment record useful, while avoiding an assumption that the same earnings necessarily continue for all 52 weeks.
For a tradesperson moving from employment into CIS work in the same industry, this could provide a practical route to assessment. The key is showing the work and earnings behind the payment records.
Why the 90% ceiling matters alongside the shorter history
A mortgage that accepts one year’s evidence may still be out of reach if it demands more cash than the borrower has available. Principality’s maximum 90% loan-to-value ratio addresses that second hurdle for eligible applicants.
On a £350,000 purchase, a 90% mortgage would be £315,000, leaving a £35,000 deposit before fees and other buying costs. By comparison, an 85% mortgage on the same property would require £52,500 upfront, a difference of £17,500.
The £17,500 difference may be meaningful for someone who has recently invested savings in setting up a business. The actual loan still depends on affordability and the value accepted by the lender.
Borrowing more also means carrying more debt. A business owner may value retaining cash, but the mortgage payment must fit alongside household spending and the reserves needed to cope with uneven income. MoneyHelper’s guidance explains why lenders consider those commitments alongside earnings.
The first completed figures could change the conversation
For accountants and their clients, the useful moment may be the completion of the first accounts or tax return. A borrower who was previously told to wait could now have the evidence needed for a fresh assessment.
HMRC provides tax calculations and tax year overviews that can be used as mortgage evidence. Having traded for a year and having the required documents ready are different milestones, so the timing of preparation matters.
The choice of deal also deserves attention. A two-year fix and a five-year fix provide different periods of payment certainty. Fees, early repayment terms and plans for the property affect the comparison, particularly if the borrower expects their circumstances to change as the business develops.
Another completed trading year may broaden future options, but it cannot guarantee a cheaper mortgage. Waiting carries its own costs; proceeding now creates a commitment that needs to work on today’s figures.
Previously deferred cases are worth a fresh look
The clearest opportunity is for borrowers whose last mortgage discussion ended with a request for more trading history. Their circumstances may deserve another review now that this range has expanded.
Willow can work with the borrower and accountant to assess the available evidence, establish the income lenders will consider and compare suitable options. For a viable purchase held back by the age of the business, the first completed year could be enough to move the discussion forward.
Has a short trading history held back your mortgage?
Willow can review your first year’s accounts, tax evidence or CIS income and compare suitable residential mortgage options. We can work with your accountant to establish which earnings a lender will consider and the deposit your purchase needs.
Explore Your Mortgage OptionsFrequently asked questions
Can I apply with one year’s accounts rather than two?
Eligible limited-company directors can apply through Principality’s dedicated one-year range, while sole traders can use one year’s tax calculations. The lender still assesses the income, property and overall affordability.
Does the 90% LTV limit mean I only need a 10% deposit?
A £350,000 purchase could require a £35,000 deposit and £315,000 mortgage at 90% LTV, assuming an accepted £350,000 valuation. Buying costs are additional, and affordability may restrict the loan below that amount.
Will all the profit in my limited company count as income?
Do not assume that it will. Principality’s published basis for this director range is salary and dividends. Business turnover or money retained in the company is not automatically interchangeable with those figures.
Are six months’ payslips enough for every CIS applicant?
No. The dedicated CIS route also requires supporting bank statements, relevant industry experience and evidence of continuing work. Six months’ payslips are part of the assessment, rather than a guarantee of eligibility.
Is this the first time Principality has offered these mortgages?
No. The announcement reported on 4 November 2026 expands the proposition following a soft launch in late April. Principality said almost 300 borrowers had already been helped during that earlier period.
About the author
Wesley Ranger is a director of Willow Private Finance. His work covers residential mortgages and specialist property finance, including complex income, higher-value borrowing and remortgages.