CIS Mortgages – Construction Industry Scheme
CIS Mortgage Advisors.
Our Mortgage Experts Online accredited advisors are specialists in CIS mortgages. Subsequently, our expert’s knowledge will help you to find the right CIS mortgage on the market to meet your specific requirements.
From big high street banks and building societies, to smaller more niche mortgage lenders, there is a lot of choice out there. Subsequently, this may feel completely overwhelming to you. Likewise, you may have no idea where to start. We can offer you guidance and help you navigate the complex world of CIS mortgages.
The brokers we work with are whole of market and offer completely unbiased advice, ensuring that you get the absolute best deal available.
Scroll down for more information and FAQ’s.
Updated 21st May 2021.
When working under the Construction Industry Scheme (CIS), you are stopped 20% tax at source. Despite this, you will submit a tax return to HMRC at the end of the tax year. When submitting your tax return, you will likely offset certain expenses against tax, such as fuel, tools, phone bills and accountants’ fees. This usually results in you receiving a tax rebate from HMRC. Cis mortgages are about presenting your income is the best way to the mortgage lender. Our CIS mortgages experts will go through the mortgage process step by step with you.
Most mortgage lenders will class you as self-employed and require a minimum of 2 or 3 years SA302’s or self-employed accounts. This means that most lenders are working off the lower declared income on the tax returns rather than the higher figure on the CIS vouchers. The upshot of this is that most CIS workers find it difficult to borrow the amount they need for a mortgage.
What is a CIS worker?
A CIS worker covers a wide variety of job roles is the middle ground between being self-employed or employed. However, most mortgage lenders treat CIS workers as self-employed.
This is because the banks do not truly understand how to assess a CIS worker, and the default option is to class you as self-employed. Thankfully, there are lenders who take a more sensible approach.
Do I qualify for a CIS mortgage?
There are a small number of lenders who work slightly different when assessing CIS income. Our experts have access to lenders who take a common-sense approach to lending for CIS mortgages. Instead of treating CIS income as self-employed income, they will treat the worker the same as being in an employed role and work off the higher figure on the pay slip before tax. So, the same criteria for employed people will be applied to you.
Previously you would have needed to show 3 years’ worth of accounts, thankfully this has now changed. You will need to show continuous employment and sustainability.
With over a quarter of the workforce working under a form of contracted employment, this has forced the high-street lenders to become more flexible in their approach to mortgage lending. Our mortgage experts will be able to advise you on which lenders will accept CIS income.
Instead of making the process of getting a mortgage for subcontractors complicated we aim to take away the stress from applying for a CIS mortgage.
How much could I borrow for CIS mortgage?
Borrowers under The CIS scheme would be assessed in the same way as employed borrowers when it comes to affordability. Affordability with most lenders typically topping out at 4.5 x income. The actual amount of borrowing available will depend on factors including.
- Deposit levels
- Credit commitments
- Child-care costs
Lenders would average the last 3-6 months gross pay and use this figure to calculate the annual income. In some circumstances they may request 12 months vouchers, this is down to the underwriter and overall strengthen of the case. The stronger case that can be presented to the CIS mortgage lender, the better the chances of being accepted.
If you need to tell HMRC about your earnings, you can do so by clicking here
How much deposit will I need for a CIS mortgage?
With any mortgage the more deposit you have the better the options will be. At present the only 5% deposit mortgages available are through the Help to Buy scheme. Click here to read all about the Help to Buy scheme and all options available.
Ideally you would have 10% as a minimum but 15% would give you the best options.
CIS mortgages with bad credit.
There are options for a CIS mortgage with bad credit. The mortgage advisors we work with are specialist in arranging bad credit mortgages.
Lenders may still be able to provide mortgages if you have bad credit. We would always advise you to check your credit report and get the latest copy for your mortgage advisor to look through.
It’s important that you explain and declare all previous bad credit and give your cis mortgage advisor all the information to ensure you get the correct advice.
To get a copy of your latest credit report click here.
Can I remortgage?
You can remortgage with CIS mortgages. You might have been originally employed when taking out the mortgage and are now on the CIS scheme. Our experts will be able to explain all the options available around CIS mortgages.
If you are not eligible for CIS mortgages, then a product transfer might be the answer. To read all about remortgages click here.
Can I get a CIS buy to let mortgage?
The criteria for CIS mortgages buying a buy to let is simpler. Most lender only require 12 months trading history and evidence in the form of tax calculation & tax year overview.
Some lenders will have a minimum income figure. For the most up to date information contact us today. To read all about buy to let mortgages click here.
CIS mortgage minimum mortgage criteria.
- 6 Months of CIS vouchers/slips
- 20% Deducted at source and showing on the slips
- 5% Minimum deposit
- Defaults/ CCJs to be registered over 24 months ago
Case Study – CIS Mortgages vs 1 year’s self-employed.
A client recently contacted Mortgage Experts Online looking for CIS mortgages. There were several issues the client came up against when trying to obtain a mortgage. Our experts have access to the whole of the market and are CIS mortgage specialists. They were able to assist the client and get the maximum borrowing available.
One of the clients was in a Debt Management Plan (DMP), the other was a (CIS) worker. They were able to find a lender who was happy with the credit profile, they were struggling to get the required affordability to achieve the loan amount they required.
The income broke down as follows.
Income 1 – £19,056.
Income 2 – £19,750.
Benefit income – £1,076.
Income 2 shows as £19,750 in the above scenario, this was taken off the self-assessment tax return (SA302) and tax year overview. The client had in fact earned £25,577 through the Construction Industry Scheme (CIS).
They were able to write off certain allowable expenses against their income. Such examples are mileage, tools and administrative costs associated with the running of his business.
Based on the one year’s self-employed income, the maximum the lender was willing to offer taking into account the clients ongoing credit commitments was £159,528.
How the CIS mortgage expert helped.
The specialist mortgage advisor looked at the figures and knew it was more preferential to look at borrowing against the Construction Industry Scheme income. They used the latest 12 months being evidenced on the Construction Industry Scheme vouchers. In total this gave a combined household income of £45,709. This mean that the maximum borrowing could be £205,690.
Looking at the Construction Industry Scheme income rather than the one years self-employed income gave the clients £46,162 additional affordability.
Certain costs had to be taken into account when using the Construction Industry Scheme income for assessing affordability (such as fuel costs which had been written off against tax), however this still gave a significantly greater loan amount when compared to the affordability being based on one years self-employed income.
Speak to a CIS mortgage advisor.
There are many lenders available ranging from high street banks and building societies to specialist lenders. We tend to find that most people go to their own bank, only to either find out they do not do CIS mortgages, get declined, or cannot borrow what they need due to lender affordability. However, just because one lender has declined you, don’t give up!
Our CIS mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. All the mortgage brokers we work with are whole of market and offer independent, unbiased advice. As such, they will have access to all the specialist lenders to really enhance your chances of you obtaining the CIS mortgage you need.
Therefore, the expert advisors we work with have experience in dealing with all aspects of CIS mortgages, and crucially use the whole of the market to access the best deals available.