What Income Is Used with One Year’s Accounts?

If you’re self-employed and only have one year’s accounts, it’s natural to wonder what income lenders will use to assess your mortgage affordability. The good news is that it may be possible to secure a mortgage—even with just one year’s trading history—but the type of income lenders consider can vary widely. So what income is used with one year’s accounts?

In this guide, we’ll explore how income is assessed, which lenders may be suitable, and what you need to consider before applying.

Can I Get a Mortgage with Just One Year’s Accounts?

Yes, some lenders—both mainstream and specialist—may consider applications from limited company directors or sole traders with only one year’s accounts. However, not all will. Your business’s performance, credit profile, and your own industry experience will influence your options.

What Income Will Lenders Use?

Lenders typically assess affordability using one of the following methods:

• Director’s salary plus dividends
• Director’s salary plus net profit after tax
• Director’s salary plus net profit before tax

Each method can significantly affect how much you’re able to borrow. For example, if your company retains profits rather than paying them out as dividends, some lenders may allow you to use those retained profits as part of your income—while others won’t.

Do All Lenders Assess Income the Same Way?

Not at all. This is why getting tailored advice is so important. Some lenders are happy to work with self-employed applicants with a limited trading history. Others may prefer a longer track record or additional reassurance.

• Mainstream lenders may want to see a steady business trajectory or previous employment in the same industry.

Specialist lenders may be more flexible, particularly if there are credit blips or a lack of industry experience.

Will The Lender Need Extra Assurance?

Possibly. Lenders may request:

• A letter from your accountant, sometimes including projected figures
• Confirmation of previous experience, particularly if you’ve recently become self-employed

For professionals such as doctors, accountants, or solicitors, some lenders may even accept applications with less than one year’s accounts.

How Do Lenders Assess Affordability?

With only one year’s figures available, lenders will generally base their calculations on that single year. There’s no averaging over multiple years as you might find with more established businesses.

What they use will depend on the income route:

• Dividends: Usually confirmed through tax returns and supported by bank statements
• Profits: Confirmed through company accounts, and potentially also tax returns and bank records

Can Other Income Sources Be Considered?

Yes, some lenders may consider:

• Rental income from investment properties
• Investment income, even if not currently drawn
• Pension income (typically from age 55 onwards)

These are all reviewed on a case-by-case basis and depend on individual lender criteria.

Does Your Profession Make a Difference?

Yes, it can. Some lenders offer professional mortgages—not a separate product, but preferential criteria for those in roles such as:

• Doctors
• Dentists
• Solicitors
• Accountants
• Teachers

Professionals are often seen as lower risk, and may benefit from higher income multiples or more flexible underwriting.

How Much Can You Borrow?

This depends on:

• Your income (however it’s assessed)
• Your credit status
• The lender’s affordability model

In general, expect to borrow around 4 to 5 times your income, with some lenders considering more for professionals or those with strong profiles. However, borrowing capacity varies widely, and just because you can borrow a certain amount, doesn’t mean you should.

Final Thoughts

Getting a mortgage with one year’s accounts is absolutely possible—but not straightforward. The way income is assessed, the type of lender used, and your personal and business circumstances all play a part.

It’s important to get advice that considers your full financial picture. That way, you can explore all your options and secure a mortgage that fits your needs—without paying unnecessary tax or compromising your financial plans.

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

There may be a fee for mortgage advice. The precise amount will depend upon your circumstances.

Symmonds de Lacey is a trading style of Easy Street Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales. Company number 6430453. Registered address: Basepoint, 377-399 London Road, Camberley, Surrey, GU15 3HL