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Kensington Mortgages provides fresh hope for Self-Employed


We are making changes to our Self-Employed mortgage products. To find out more, take a look at the press release below.



  • Focus on underwriting enables Kensington to enhance its offering to the self-employed
  • Ability to consider the share of net business profits plus salary for company directors

Kensington Mortgages is launching a new policy for self-employed customers, with affordability taking into consideration a company director’s share of net profits in addition to their salary.

The mortgage, which is launched on Monday 22nd June, is available to sole company directors and their partners. It is designed to reflect the true earnings of successful entrepreneurs who choose to keep some profit in their business rather than draw it all down as salary.

The move will help expand options for the UK’s 4.5 million* self-employed in a market which has struggled due to restrictions on lending to borrowers who are not in full-time employment. Kensington’s own research** among brokers shows 37% say self-employed borrowers struggle to prove their income compared with just 3% of employed customers.

It is common practice for many small business owners to take only the salary they need in order to be tax efficient. But while leaving profit in their business is a good way to strengthen the balance sheet of their company, it can also reduce their chance of getting a mortgage.

The vast majority of lenders will only consider salary and dividends when assessing the affordability of self-employed customers and Kensington is the only lender that is able to consider both profits and salary based on a customer’s previous year’s accounts.

How it works:
In the example below we assume a sole company director who chooses to take a salary of £10,000 (paid from the Administrative expenses) and dividends of £40,000



Administrative expenses


Operating profit


Profit on ordinary activities before tax


Tax on profit


Profit for the financial year


Dividends paid


Profit after Dividends


By considering profit as well as salary, Kensington would be able to base its affordability assessment on both the salary taken by the customer and the company profit for the financial year.

Salary: £10,000
Profit for the financial year: £94,000
Income Kensington could use for affordability: £104,000

Keith Street, Head of Kensington, said: “In 2009 Kensington launched an approach to self-employed lending based on reviewing the last 12 months accounts, which meant that entrepreneurs no longer had to wait for three years to get a mortgage.

“But we know that there is more we can do to help customers in this vital sector. We recognise that for many directors of small companies, salary and dividends on their own are not a true reflection of their income and affordability. Which is why we can now make affordability assessments taking into consideration a company director’s share of profits in addition to their salary.

“This is a significant step in the way we approach lending to the self-employed and it is just one of the ways that Kensington is reacting to the shifting employment trends amongst our customers to ensure we are able to make responsible decisions without penalising those customers who do not fit a standard mould.“


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