For years, business owners were told the same thing: you need at least two full years of accounts before a lender will take your income seriously. This belief became so deeply rooted that many directors still assume they must wait—sometimes unnecessarily—before applying for a mortgage. But the landscape in 2025 looks very different, particularly for growth businesses whose latest year of trading far exceeds previous performance.

Across the lending market, a notable shift has taken place. While some high-street banks continue to use rigid affordability rules, a growing number of specialist lenders and private banks now prioritise the most recent year of accounts when assessing income. For companies posting strong, upward-moving results, this can dramatically increase borrowing power. It also allows directors to avoid the frustration of having earlier, lower-earning periods drag down their affordability.

This trend aligns with the broader evolution in underwriting for business owners covered in guides such as Mortgages for Self-Employed Borrowers in 2025 and Can I Get a Mortgage with Complex Income?. Lenders increasingly recognise that entrepreneurial income rarely follows a smooth or predictable trajectory. Instead, growth often happens in leaps—new contracts, product lines, client wins, or expansion phases.

Understanding when lenders will accept the latest year alone is therefore essential for any business owner seeking to maximise their mortgage potential in 2025.

Why Lenders Historically Relied on Two Years of Accounts

For decades, the two-year rule existed for one reason: stability. Lenders believed that averaging income across multiple periods reduced risk, particularly for self-employed individuals whose earnings could fluctuate.

However, this reasoning increasingly fails to reflect modern entrepreneurship. Many businesses experience relatively modest early revenue before growing sharply once they scale operations, hire strategically, or secure major contracts. Penalising these borrowers because of early-stage earnings no longer aligns with real-world trading patterns.

Regulated lenders still value prudence, but they now differentiate between volatile income and upward-trending performance. Where a business is clearly growing with evidence to support sustainability, underwriting approaches have evolved.

Why 2025 Marks a Shift Toward One-Year Assessments

In 2025, multiple market conditions have pushed lenders towards a more progressive interpretation of director income.

1. Clearer Digital Accounting & Faster Financial Insight

Cloud-based financial systems and real-time accounting enable lenders to understand a company’s current position far more accurately than before. Instead of relying solely on historic tax returns, underwriters now have visibility of recent trading performance, liquidity, reconciled cash flow and management accounts.

2. Rising Specialist Competition

Specialist lenders—and especially private banks—compete for sophisticated clients, including entrepreneurs, high-growth companies and complex borrowers. To attract them, these institutions must recognise income properly rather than rely on outdated metrics.

3. The Reality of Modern Growth Businesses

A business that turned over £250,000 last year and £600,000 this year is operating on a fundamentally different financial footing. Using a two-year average penalises growth disproportionately. Many lenders now acknowledge this and structure their policies accordingly.

4. Regulatory Comfort with Evidence-Based Underwriting

As long as a lender can justify affordability using robust financial evidence, the FCA allows flexibility. This has opened the door to modernised underwriting practices.

How Lenders Decide Whether One Year Is Enough

Lenders do not randomly decide between one or two years of accounts; the choice depends on the financial profile of the business. To determine whether a borrower qualifies for a one-year assessment, lenders evaluate the direction, strength and sustainability of performance.

They typically begin by reviewing the most recent year’s accounts in detail, but they do not ignore earlier performance entirely. Instead, they compare the latest trading period to prior years to determine whether the upward trajectory appears stable or simply anomalous.

If the latest year shows strong net profit, clean financials, and demonstrable trading momentum, many lenders will take that year alone as the basis for affordability. Where volatility, irregular cash flow or one-off spikes appear, lenders may default back to averaging.

This is why the presentation of accounts—and the narrative that accompanies them—matters significantly.

Why Growth Businesses Benefit Most

High-growth companies represent the biggest winners in this shift. A business that has doubled or tripled turnover, or significantly increased net profit, can often secure far higher borrowing when assessed on current performance rather than historic averages.

For example, a consultancy earning £60,000 profit two years ago and £150,000 last year would see an affordability gap of tens or even hundreds of thousands depending on the lender. When the latest year alone is used, borrowing power aligns with reality, not outdated income.

This parallels scenarios discussed in Profit-Based Mortgages and Directors’ Remuneration & Retained Profits, where the key determinant is not what a director chooses to draw but what their business can actually support.

How One-Year Assessments Work in Practice

When a lender is willing to use the latest year of accounts alone, affordability calculations typically follow one of several models depending on the business structure.

Sole Traders and Partnerships

For unincorporated businesses, lenders will analyse net profit as declared on the SA302. If the latest year shows significant improvement and carries no signs of volatility or extraordinary items, it may be used as the entire basis of income.

Limited Company Directors

For limited companies, lenders focus primarily on net profit before tax, retained earnings, company liquidity, debt obligations and any adjustments or add-backs that create a more complete picture of true profitability.

Specialist and private banks may also consider EBITDA, cash reserves and future contracts—particularly for businesses with healthy pipelines.

Group Structures

Where a director owns multiple companies, lenders may examine group-level performance. Consolidated trading strength can justify using the latest year of accounts even where individual entities appear uneven.

The key requirement in all scenarios is that the latest year is materially stronger, sustainable and reflective of the ongoing performance of the business.

When Lenders Still Require Two Years

Although the market has modernised, there are circumstances where lenders continue to rely on two full years.

These include companies with inconsistent earnings, seasonal trading patterns, limited trading history, or signs of cash-flow stress. In such cases, underwriting requires a more cautious approach to ensure affordability remains realistic.

Traditional high-street lenders are also more likely to insist on averaging, simply because their affordability models are designed for straightforward income profiles rather than entrepreneurial ones.

This is why business owners applying directly to mainstream banks often feel they are “not being understood”—a theme explored in Why Your Mortgage Broker Might Be Costing You Thousands.

The Strategic Advantage of Strong Financial Presentation

The way accounts, management information and company structure are presented can influence whether one or two years are used. Lenders are not only assessing numbers—they are assessing credibility, sustainability and financial stewardship.

Directors who present:

• Clean, well-prepared accounts
• A logical financial story behind growth
• Clear evidence of liquidity and stability
• Accountant-certified projections where appropriate
• A strong narrative demonstrating business momentum

…stand a far better chance of qualifying for a one-year assessment.

This ability to “package” a case properly is a specialist skill and a key reason business owners benefit from working with brokers who understand complex income.

What This Means for Borrowing Power in 2025

When a lender accepts the latest year alone, the impact on affordability is often decisive. Borrowers may see:

• Higher maximum borrowing
• Access to more competitive rates
• Improved loan-to-value options
• Faster decision speeds
• Greater choice among specialist lenders and private banks

In many cases, directors who previously believed they “couldn’t borrow enough” discover they can secure the exact facility they need once income is assessed correctly.

This aligns with themes in Complex Income Mortgages for City Professionals, which reinforces that modern underwriting is more sophisticated and interpretive than ever.

Hypothetical Example

Consider a business that generated £80,000 profit two years ago and £180,000 last year. A traditional lender averaging these figures may assess income at around £130,000. A lender using the most recent year alone would assess income at £180,000.

That £50,000 gap in usable income can materially change borrowing capacity—often by hundreds of thousands of pounds depending on loan size and LTV.

This type of scenario is routine across the director marketplace and illustrates why relying solely on high-street banks can be limiting.

Outlook for the Next 12–18 Months

Growth-focused underwriting is expected to expand further into 2026 as lenders continue refining their assessment of entrepreneurial income. With more private banks entering the UK mortgage market and specialist lenders intensifying competition, the ability to use a single, strong trading year is likely to become even more widespread.

For directors, the key takeaway is simple: your most recent performance carries more weight than ever, provided you work with lenders who understand it.

How Willow Private Finance Helps

Willow Private Finance specialises in structuring cases for business owners whose income does not fit traditional models. The firm works closely with specialist lenders and private banks that understand upward-trending businesses and are willing to use the latest year of accounts where justified.

Willow presents your financials in a way that highlights growth, stability and liquidity, ensuring underwriters see your true affordability rather than an outdated income average. This includes coordinating with accountants, preparing financial narratives, organising documentation, and selecting lenders whose criteria favour high-growth trading profiles.

For businesses moving quickly, this can be the difference between being held back—or securing the property, investment or refinance opportunity at exactly the right moment.

Frequently Asked Questions

Q1: Do all lenders require two years of accounts?
No. Many specialist lenders and private banks now accept the latest year alone, particularly for high-growth businesses.

Q2: Why would a lender prefer the most recent year?
Because growth businesses often show strong upward trends, and the latest year is a better reflection of true affordability.

Q3: What happens if my most recent year is weaker?
In that case, lenders typically revert to averaging or may use the lower figure alone.

Q4: Can I still qualify with only one year of trading?
A few lenders will consider this, but criteria are strict and typically require exceptional financial strength.

Q5: Does this apply to limited company directors and sole traders?
Yes. Both can benefit from one-year assessments where performance is stable and well-documented.



Q6: Can management accounts support a one-year assessment?
Yes. Strong management accounts and accountant-certified projections often strengthen a lender’s confidence.

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