Mortgages for CIS Workers

Last updated: May 12th, 2022
  • ‘Common Sense’ Underwriting
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Mortgages for CIS Workers

Last updated: May 12th, 2022
  • ‘Common Sense’ Underwriting
  • 95% Mortgages Available
  • Only 1 Year’s Track Record Required
  • 5 * service

Construction Industry Scheme Mortgages

What is The Construction Industry Scheme?

The Construction Industry Scheme (CIS) was set up by HM Revenue & Customs to allow registered contractors to deduct money at source from the payments they make to subcontractors. That money goes to HMRC and is put towards the amount of income tax and National Insurance that the subcontractor will be expected to pay after filing accounts.

Subcontractors don’t have to register for CIS, but if they don’t, deductions are made at a higher rate, for example, 30% rather than 20%. The Government’s CIS guide for contractors and subcontractors has more details.

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What is a Construction Industry Scheme mortgage?

A CIS mortgage is a term you might hear when a contractor or subcontractor who’s enrolled in the government programme, is applying for a mortgage.

A mortgage lender will need to know that you are enrolled in CIS if you trade as a contractor as it will be relevant when it comes to assessing your income.

Not all lenders offer CIS Scheme mortgages, and those that do may have different lending criteria. Typically, CIS Scheme mortgages allow subcontractors to prove income using the gross amount shown on the payslips they receive from contractors, rather than having to provide business accounts or a SA302, which shows the year-end tax calculation from a Self-Assessment tax return. This can be helpful to applicants with less than two years’ worth of accounts to show.

CIS lenders generally assess applicants on a case-by-case basis. Typically, to qualify for a CIS scheme mortgage you can expect to be asked to provide your CIS payslips for at least the last three months, sometimes six. They will be used to calculate an average monthly income, from which an annual income figure will be worked out. You may also need to provide bank account statements for the same period.

To qualify for CIS mortgages, you need the following:

  • 6 months CIS payslips
  • Tax on the scheme must be deducted at 20%
  • Minimum of 5% deposit

Provided a subcontractor is registered for the CIS scheme, lenders will generally accept payslips as proof of income. If a subcontractor is not registered, they may have to provide at least one year’s accounts or an SA302 and expect the declared figure to be used in the mortgage calculation.

It’s a good idea to have a minimum of 10% saved, but 5% is occasionally possible. As with any borrower, the greater the sized deposit the greater potential to access better rates.

Lenders will usually take an average of the earnings shown on your previous three to six months of payslips to calculate your annual income. Then they may offer to lend an amount in line with their own criteria, which can be around four to five times your annual income.

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