Employed, self-employed or director? How your status changes your mortgage options
When applying for a mortgage in the UK, how you earn your income is often just as important as how much you earn. This is an area where many foreign nationals — including high-earning professionals and business owners — are caught by surprise.
UK lenders assess income differently depending on whether you are employed, self-employed, or a company director, and these distinctions can significantly affect borrowing capacity, lender choice, and application timelines.
Employed applicants
Applicants paid through PAYE are generally seen as lower risk by lenders, as income is predictable and easy to evidence. However, this does not mean the process is always straightforward.
Bonuses, commissions and overtime are often:
Only partially accepted
Averaged over one to two years
Subject to lender-specific limits
At higher income levels, lenders may also assess the sustainability of bonuses, particularly if they form a large proportion of total income.
Self-employed applicants
For self-employed individuals, lenders typically require at least two years of accounts or tax returns. Income is usually assessed based on:
Net profit, or
An average of the last two years
Fluctuations in income, recent growth, or changes in business structure can all affect how lenders view affordability. While strong earnings are positive, consistency and clarity are key.
Early preparation is essential, particularly for those planning to purchase higher-value properties.
Company directors
Company directors are assessed differently again. Many lenders focus on salary and dividends only, ignoring retained profits within the business. Others may consider a share of retained profits, but criteria vary significantly.
Decisions around remuneration, dividend levels and tax efficiency can therefore have a direct impact on mortgage options. What may be sensible from a tax perspective is not always aligned with lender affordability models.
This is where specialist advice becomes particularly valuable.
Why this matters for larger mortgages
As property values and loan sizes increase, lenders apply greater scrutiny. Income structure, documentation quality and consistency become more important, not less. High earners are often surprised to find that complexity, rather than income level, is what limits their options.
Taking a strategic approach
Understanding how lenders assess your income allows you to plan proactively — whether that means adjusting timing, documentation, or overall structure before applying.
A well-prepared application improves lender choice, reduces delays and helps ensure that your mortgage supports your long-term plans rather than restricting them.
If you would like strategic mortgage advice tailored to your circumstances, you can contact Dream Casa Mortgage Consultancy to arrange an initial consultation.
Written by Taihnee Bernardes
Founder & Mortgage Adviser Dream Casa Mortgage Consultancy