Construction Industry Scheme/CIS Mortgages are Mortgages which are specifically designed for those in the Construction industry, which are paid through HMRC’s Construction Industry Scheme.
The most common Contractor enquiries we get from Applicants are Construction Industry Scheme Contractors (CIS Contractors). A lot of the time these types of Contractors come to us after either being declined by a lender or being offered a much smaller Mortgage amount than they require.
The reason for this is most lenders view CIS Contractors as Self-Employed and therefore require years’ worth of accounts and go off the Net Profit figure shown within their accounts. This is often much lower than their actual earnings as the Net Profit is the final figure after all of their expenses have been taken off.
However, there are lenders out there which won’t deem CIS and some other Contractors under the same criteria as they do Self-Employed. And each will have their own ways of calculating and assessing these types of income.
We know which lenders are best to go to when you need to maximise the amount you can borrow.
Contact us to speak to one of our Mortgage Advisors which Specialise in this area here.
Construction Industry Scheme Mortgages
Usually applicants under the CIS Scheme, will struggle to obtain a Mortgage as most lenders will deem them as Self Employed and will use their Net Profit figure as shown on their Tax Calculations. This will often result in the lender slashing the amount they are able to borrow.
Fortunately, there are some lenders who have specific criteria for CIS Contractors, where they essentially view them in a similar way for affordability purposes as employed persons.
This massively increases the amounts that applicants are able to borrow. Not only that, these lenders also offer some of the most competitive rates in the market. And our Mortgage Advisors regularly get exclusive deals with these lenders, making these rates even cheaper.
To be considered by these lenders on this basis you will usually need to meet the following criteria:
- Your tax is deducted at source, before you receive your wages
- Have a minimum of 3 months payslips or
- Have a 12 month track record as a CIS Contractor
Obtaining a Mortgage on this Scheme is also available to the following:
- Applicants with a 5% Deposit
- Those who have less than 1 years Self-employed figures
- Those with previous Light Adverse Credit
What documentation the Mortgage Lenders will need to approve your Mortgage Application:
- 3-12 Months worth of Payment slips, dependant on the Mortgage Lender – lenders will use the gross figure (before tax) on your payslips to calculate your annual earnings and use this to help calculate how much you can borrow
- Up to 3 Months worth of Bank Statements
Each individual case is of course different, and it is best to speak to one of our Mortgage Advisors who Specialise in these cases.
Am I eligible for a CIS Mortgage?
If you work in the Construction Industry and are paid through the Construction Industry Scheme, you will be eligible for a CIS Mortgage.
A good tell tale sign is if you receive your pay after tax. If you do, there is a good chance you will be able to benefit through the CIS Mortgage scheme.
We often find applicants are completely unaware that they are paid via the CIS Scheme.
So if you work in the Construction industry or on a Construction site and believe you are Self Employed.
It is always worth checking whether you are part of this scheme. This could be with the main Contractor or your Boss. Or with a Mortgage Advisor. One of them will be able to tell you, if you’re not sure.
CIS Mortgage Lenders?
If you trust us to advise you on your Mortgage. You will have access to all CIS Mortgage Lenders. Including those which have specialist criteria specifically for CIS Contractor Mortgages.
The benefit of going to these Mortgage Lenders is the way they treat your income.
As mentioned above, you will usually be able to obtain a Mortgage with as little as 3 CIS Payslips/Invoices. And be able to borrow considerably more than what you would with other Lenders.
Since the pandemic, the number of Lenders who have specialist criteria for CIS workers has been fluctuating. So we will have to check with you on an individual basis to assess your eligibility for the CIS Scheme.
The largest CIS Mortgage Lender is Lloyd’s Banking group. But there are other Lenders who could be a better choice depending on which Mortgage Lender has the cheapest Mortgage available to you at the time of application.
How much can I borrow on a CIS Mortgage?
Mortgage Lenders which have specialist criteria for CIS workers, will calculate your annual salary using one of the following 3 methods:
1. average 3 months pay: Using an average of your latest 3 months payslips; i.e. January pay £2,000, February pay £2,600 and March pay £1,700. Equates to £6,300.
Divide this by 3 months, equals £2,100. Which provide the average monthly pay. Times this by 12 to give an annual figure of £25,200. This will be your assessable pay.
2. Average 6 months pay: other lenders may use an average of the last 6 months.
3. Last 12 months pay: some Lenders may use the last 12 months worth of payslips to assess your annual figure. This may happen where your monthly or weekly figure fluctuates by quite a lot.
Other Mortgage Lenders which don’t have specialist CIS Mortgage criteria, will generally require latest 2-3 years worth accounts. Which will usually show a lower annual earnings figure than one of the above methods.
How much you are then able to borrow will be based on your total income and your monthly outgoings.
To give you a rough idea, please see the following here.
Can I get a CIS Mortgage with Bad Credit?
Yes, it is possible. It really depends on the severity of the adverse credit.
The following may be possible, subject to the relevant Lenders internal Credit Scoring:
Missed payments subject to amount and frequency.
Defaults and CCJ’s, will usually need to be registered at least 2-3 year ago.
More sever adverse Credit such as IVA’s, Bankruptcies and Repossessions will usually need to have been registered more than 6 years ago, and satisfied/discharged.
When you have Bad Credit and are looking to obtain a Mortgage. Speaking to an Specialist Mortgage Advisor, is always going to be the only viable option.
As a specialist in these areas, we have access to all Specialist Mortgage Lenders.
Simply have a question or need to get moving. Next steps?
Not all Mortgage Advisors will have the specialist knowledge or even deal with CIS Mortgages.
Simply complete our short Mortgage Enquiry form and we will get one Mortgage Advisor to give you a call.
They can answer any other questions you have, provide you with a free non-obligatory quote and/or talk you through the process in greater detail.
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