Why Limited Company Directors Get Declined for Mortgages in 2026

By Ifthikar Mohamed

If you’re a company director and you’ve ever been told:

“Based on your income, you can borrow less than expected.”

You’re not alone.

And in most cases — the issue isn’t your income. It’s how lenders are reading it.

A Real Pattern I Keep Seeing

Over the last decade, I’ve processed more than 4,000 mortgage applications. Directors are some of the most financially capable clients I work with. Yet they’re also the ones most likely to:

• Optimise for tax
• Assume SA302 is enough
• Leave profits in the business
• Prepare too late

And in 2026, that gap is costing people.

The 2026 Mortgage Reality

We are now firmly in what many are calling the mortgage reset.
Clients coming off 1–2% deals are moving onto rates around 3.5–4%.

Lenders are tighter.
Underwriters are stricter.
Affordability models are less forgiving.

This means structure matters more than ever. Especially for directors.

In today’s 2026 market, maximising your borrowing “lens” is not just about getting a bigger house.
It’s about qualifying for competitive products that demand lower Loan-to-Value ratios and stronger affordability positions.

The SA302 Problem

Most directors assume lenders use:

Salary + Dividends = Borrowing Power

That’s partly true. But here’s what many don’t realise:

Some lenders will consider:

• Retained profits
• Net profit before dividends
• Director shareholding
• Business sustainability

Others won’t.

The difference can mean tens — sometimes hundreds — of thousands in borrowing.

Same income.
Different lender lens.

TLDR – Quick Summery

If you are a limited company director:

• Your tax efficiency strategy may reduce borrowing power
• Not all lenders treat retained profits the same
• Preparation should start 6–12 months before applying
• Accountant and mortgage adviser must align early

The issue is rarely income. It’s structure and timing.

Why Directors Get Declined

In 2026, declines are usually caused by:

1. Income structured for tax efficiency only
2. No retained profits letter
3. Dividend timing misaligned
4. Credit layering issues
5. Applying to the wrong lender

None of these are permanent problems. They are preparation problems.

The Bigger Strategy

Directors usually have two advisers:

• Accountant → Focused on tax efficiency
• Mortgage adviser → Focused on lending strategy

If they don’t speak before the application, you risk:

Optimised tax.
Reduced borrowing.

When aligned properly, you can often achieve both.

Frequently Asked Questions

Can retained profits be used for a mortgage?

Yes — but only with certain lenders. It depends on shareholding, sustainability of profit, and supporting documentation.

How many years of accounts do directors need?

Typically two years. Some lenders consider one year, but options reduce significantly.

Is SA302 enough for a mortgage?

Not always. Some lenders require full accounts, tax overviews, and potentially an accountant’s letter.

Should I increase dividends before applying?

Possibly — but this should be discussed 6–12 months before applying, not just before submission.

When should a director start preparing for a mortgage?

Ideally 6–12 months in advance to align tax strategy and borrowing goals.

Director’s Mortgage Readiness Kit

If you are planning a mortgage within the next 12 months, preparation beats panic.

We created a practical working document called:

The Director’s Mortgage Readiness Kit

It helps you:

• Speak to your accountant confidently
• Request the right retained profit letter
• Prepare your credit profile
• Align timing correctly

Download it before you apply.

It may save you a decline.

About the Author

Ifthikar Mohamed is a Director at WIS Mortgages with over a decade of experience in the UK mortgage market.

He has processed more than 4,000 mortgage applications and specialises in complex income structures, including limited company directors and self-employed professionals.

In addition to advising clients, Ifthikar is also the co-founder of an AI-powered mortgage technology platform designed to improve efficiency and reduce administrative friction within the mortgage process.

His focus is simple: structure first, strategy second, submission third.

FCA Warnings:

Your home or property may be repossessed if you do not keep up repayments on your mortgage.