TL;DR
- Dental income does not always fit the standard PAYE model used by many mortgage lenders.
- Associate dentists, practice owners, partners and limited-company owners may all be assessed differently.
- Depending on the lender, you may need accounts, SA302 tax calculations, Tax Year Overviews, payslips, contracts or evidence of practice income.
- Some lenders assess an average of previous years’ income, while others may consider the latest year when the circumstances and supporting evidence justify it.
- The way your income is presented can affect how much of it a lender includes in its affordability calculation.
- A mortgage broker who understands dental income can help identify lenders whose criteria are better suited to your professional and financial circumstances.
When Your Dental Income Does Not Fit the Standard PAYE Model
Dentistry can offer considerable professional flexibility, but that flexibility can make proving your income more complicated when you apply for a mortgage.
Many mortgage affordability models are designed around applicants who receive a fixed salary supported by regular payslips and a P60. A dentist’s income, however, may come from several sources, including:
- NHS dental work
- Private treatment fees
- Associate agreements
- Practice profits
- Partnership income
- Salary and dividends from a limited company
- Retained profits within a dental business
Your income may be stable and your career well established, but the figures will not necessarily fit neatly into an automated lending system. The issue is often not how much you earn, but how a particular lender calculates the income it is prepared to use.
How Mortgage Lenders Assess Dentists’ Income
The way a lender assesses your income will depend on how you work and how your dental business is structured.
An employed dentist may be assessed using payslips, a P60 and the terms of their employment. A self-employed associate will usually need to provide evidence such as accounts, tax calculations and Tax Year Overviews. Practice owners, partners and limited-company owners may require a more detailed assessment of both personal and business finances.
Some lenders use an average of income shown over the previous two or more years. If your income has increased significantly, averaging older and newer figures could result in a lower assessed income than your current earnings suggest.
Other lenders may consider the most recent year, particularly where there is a clear explanation for the increase and evidence that the higher level of income is sustainable. This could include an established professional history, a new associate agreement, increased working hours, additional private work or the acquisition or expansion of a dental practice.
If income has fallen, lenders will generally want to understand why. Depending on the circumstances, they may base affordability on the lower or more recent figure. Criteria vary considerably, so no single assessment method applies to every dentist or every lender.
Your Working and Business Structure Matters
How you practice dentistry can directly affect how a mortgage lender assesses your income.
Employed dentists
Employed dentists are generally assessed in a similar way to other salaried applicants. A lender may consider basic salary together with regular additional income, provided it can be evidenced and meets the lender’s criteria.
Associate dentists
Associate dentists may be assessed in several ways, depending on how they are paid, how their business is structured and the lender’s individual criteria.
Where an associate dentist is self-employed, a lender may assess income using taxable profit or income declared through Self-Assessment. Supporting documents may include SA302 tax calculations, Tax Year Overviews, accounts and bank statements.
Some lenders may also assess an associate dentist using their most recent three months’ income remittance statements or receipts. The lender may use these to establish an average and calculate an annualised income figure. An associate agreement, bank statements and evidence that the income is expected to continue may also be required.
This approach can be particularly helpful for associate dentists who have recently become self-employed, moved to a new practice or experienced a recent increase in income.
Some associate dentists operate through a Limited Company. In these circumstances, the lender may assess salary and dividends, company profits or recent remittance income, depending on its criteria and the evidence available.
Dental practice owners and sole traders
If you own a dental practice as a sole trader, lenders will generally focus on the net profit shown in your accounts and tax records. They may also examine recent business performance, business bank statements and any material changes affecting the practice.
Limited Company owners
Dentists operating through a Limited Company may take a combination of salary and dividends while retaining some profit within the company. This structure may be used by both associate dentists and dental practice.
What Documents Might a Dentist Need?
- SA302 tax calculations or tax computations
- Tax Year Overviews
- Full or finalised business accounts
- Recent business and personal bank statements
- Payslips and a P60 if any income is received through PAYE
- An accountant’s certificate or reference
- Associate or consultancy agreements
- Partnership accounts and confirmation of your share of the business
- Evidence of NHS and private-practice income
- Recent management accounts where the latest trading position is relevant
- An explanation and supporting evidence for any temporary fall in income
A temporary reduction caused by parental leave, illness, reduced hours, a practice move or another identifiable event does not necessarily prevent you from obtaining a mortgage. It is important, however, that the circumstances are explained clearly and supported by appropriate evidence.
Can Dentists Get a Mortgage with Less Than Two Years’ Accounts?
It is commonly assumed that every self-employed dentist needs at least two full years of accounts before applying for a mortgage. That is not always the case.
Some lenders may consider an application supported by one year of accounts. This can be particularly relevant where a dentist has a strong professional history and has moved from employed dental work into a self-employed associate role or another closely related position.
The lender may want to see evidence such as:
- Your previous employment history
- Your current associate or practice agreement
- Your qualifications and professional experience
- Your first year’s accounts or tax calculation
- Recent bank statements
- Confirmation from your accountant
- Evidence that your current income is continuing
Having less than two years’ accounts will normally reduce the number of suitable lenders, but it does not automatically prevent you from obtaining a mortgage.
You can learn more in our guide on how getting a mortgage with less than two years of accounts works.
Understanding Your True Borrowing Potential
Mortgage lenders do not base their decision solely on the amount entering your bank account each month.
They first decide how much of your income they are prepared to recognise. They then assess that income alongside your deposit, credit history, existing borrowing, regular commitments, household expenditure, mortgage term and expected monthly payments.
For dentists, the main difficulty is often establishing the correct income figure at the beginning of this process. Two lenders could review the same accounts and reach different affordability figures because their approaches to self-employed income, dividends and company profits are different.
This means a general online affordability calculator may not provide an accurate picture if your income comes from several sources or you operate through a dental business.
Our guide on how much you can borrow explains the other factors lenders consider when calculating mortgage affordability.
Why Individual Underwriting Can Matter for Dentists
An automated assessment may struggle with an applicant whose income includes practice profits, variable private fees, partnership income or a combination of salary and dividends.
Where individual underwriting is available, the lender may be able to consider the wider circumstances surrounding the application. These can include:
- Your professional background
- The history and performance of the dental practice
- Your associate or partnership arrangements
- The reason for a recent change in income
- Current management figures
- Business cash reserves
- The sustainability of your present earnings
This does not guarantee that all income will be accepted, but it can allow a well- supported application to be considered on its individual merits.
How a Specialist Mortgage Broker Can Help
Different lenders can take very different approaches to dental income. A lender that suits an employed dentist may not be the right choice for a practice owner, partner or limited-company director.
An experienced mortgage broker can review how you earn, identify the documents needed and determine which lenders are more likely to assess your circumstances appropriately.
The broker can also explain any unusual features before the application reaches underwriting. This may be particularly helpful if:
- You have recently become self-employed
- You have less than two years’ accounts
- Your income has increased
- You retain profits within a limited company
- You have recently purchased or joined a practice
- Your income comes from both NHS and private work
- You have taken parental leave or experienced another temporary income reduction
Sarah Grace Mortgages works with dentists and other professionals whose income does not fit a standard salaried model. We can help you understand your borrowing position and approach lenders whose criteria are appropriate for your circumstances.
FAQs
Do mortgage lenders always average a dentist’s income over two years?
No. Some lenders average income over two or more years, while others may use the latest year in appropriate circumstances. If income has fallen, a lender may take a more cautious approach. The treatment will depend on the lender’s criteria and the evidence available.
Is it harder to obtain a mortgage as a self-employed dentist?
Not necessarily. Being self-employed does not automatically prevent you from obtaining a competitive mortgage. You may, however, need to provide more financial evidence than an applicant receiving a straightforward PAYE salary.
Does working through a limited company make obtaining a mortgage more difficult?
It makes the assessment different rather than automatically more difficult. Some lenders use salary and dividends, while others may consider salary together with a share of company profits. The most suitable approach will depend on your company accounts and how you draw income.
Can retained company profits be included in my income?
Potentially. Some lenders may consider retained or undistributed profits, but many will not. The lender may also assess your ownership percentage, the company’s financial position and whether using those profits would be sustainable.
What if my dental income varies from month to month?
Monthly variation is common, particularly for associate dentists and those undertaking a mixture of NHS and private work. Lenders will normally be interested in your overall income, its history and whether it appears sustainable. The exact assessment will depend on your working structure and the lender’s criteria.
Can I get a mortgage with only one year of self-employed dental income?
Possibly. Some lenders will consider one year of accounts, particularly where you have previous experience in dentistry and can demonstrate continuity between your earlier role and your current self-employed work. Options are usually more limited, and the supporting evidence becomes especially important.
What happens if my income falls because of parental leave or illness?
A temporary reduction does not always need to be treated in the same way as a permanent decline. Some lenders may consider your return to work and current income if the circumstances can be documented clearly. Each case will be assessed individually.
Should I speak to a mortgage broker before applying?
Speaking to a broker before submitting an application can be helpful when your income is complex. It allows your accounts and working structure to be reviewed before a lender carries out a credit search or formal assessment.
Speak to a Mortgage Adviser Who Understands Dentists.
Your dental income may be more complex than a standard salary, but that does not mean your mortgage options have to be limited.
Whether you are an associate dentist, practice owner, partner or limited-company director, Sarah Grace Mortgages can help you understand how lenders are likely to assess your income and identify options suited to your circumstances.
Contact Sarah Grace Mortgages to discuss your mortgage requirements with an experienced adviser.
Compliance Note
Mortgage availability and lending criteria are subject to individual circumstances and can change.
Sarah Grace Mortgages Limited is authorised and regulated by the Financial Conduct Authority and is Registered in England and Wales. Registered Number 09839864. As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments. The Financial Conduct Authority does not regulate most forms of Commercial Buy to Let Mortgages and Mortgages to Limited Companies.
