What Is a CIS Mortgage?
If you are paid via the Construction Industry Scheme (CIS) and are thinking about a mortgage, then we’re delighted you have found this page.
We hope you’ll also be pleased as our team here at The Mortgage Pod has over 35 years of experience helping home buyers, including many self-employed construction workers, find and secure suitable mortgages.
We specialise in helping CIS workers increase their mortgage options by assessing their gross income (before tax and national insurance) rather than net income after allowable deductions like tools or equipment. This specialist approach improves your mortgage chances and expands the number of CIS mortgage lenders you can work with.
If you are ready, Get Started with us today. If not, we hope this guide provides everything you need to know about CIS mortgages explained, and we’re ready to chat when you are.
What Is a CIS Mortgage?
A CIS mortgage is the term used when assessing income for applicants registered under the Construction Industry Scheme (CIS), where tax is deducted at source. This scheme allows CIS subcontractors to show higher gross annual income, improving their mortgage application strength.
Unlike self-employed applicants, who often face reduced net profit due to business expenses, CIS workers can base applications on gross income shown in their CIS payslips or CIS statements.
This often results in access to higher mortgage borrowing amounts and more flexible mortgage deals.
What Is the Construction Industry Scheme (CIS)?
The Construction Industry Scheme (CIS) is a government initiative regulating how payments are made to subcontractors within the construction industry.
Under the CIS scheme, contractors deduct tax and send it directly to HMRC, impacting how self-employed individuals report income on their self-assessment tax return.
Understanding your CIS status is crucial when applying for a mortgage, as not all lenders assess your gross and net income the same way.
How Are CIS Mortgages Different from Self-Employed Mortgages?
The key difference between a CIS mortgage and a self-employed mortgage lies in income assessment:
- CIS mortgage: Uses gross income from CIS payments made by registered construction contractors.
- Self-employed mortgage: Relies on self-assessment tax return or SA302 documents, which usually show lower net income due to deductions.
This means CIS mortgages work in a way that often gives access to higher mortgage amounts, especially for self-employed construction workers with low reported net profit but strong gross income.
Is It Hard to Get a CIS Mortgage?
While most lenders treat CIS applicants as self-employed workers, this can limit your borrowing potential. However, there are specialist lenders and subby-friendly lenders who look at gross income, making it easier to secure a CIS mortgage if you use the right lender.
To get a mortgage with the best outcome, it’s wise to seek advice from an experienced CIS mortgage expert like our team at The Mortgage Pod, who understand how CIS mortgages work.
How Much Can a CIS Contractor Borrow on a Mortgage?
A CIS contractor can typically borrow 4 to 5 times their annual income, based on gross income before deductions like materials, fuel, or tools.
This approach can significantly increase borrowing compared to a standard mortgage application for self-employed individuals. Lenders may also look at your average monthly income or day rate calculations to determine affordability.
How Much Deposit Do I Need for a CIS Mortgage?
While some CIS mortgage lenders may offer 0% deposit schemes under special circumstances, it’s usually recommended to provide at least a 5% deposit.
A bigger deposit can improve your chances of securing a lower interest rate and better overall mortgage deal, and may even open up more mortgage options across the market.
What Documents Are Required for a CIS Mortgage?
To apply for a CIS mortgage, you’ll typically need:
- CIS vouchers or payslips: Usually covering at least 13 weeks, though some lenders require 52 or 104 weeks.
- Bank statements: Three months of personal and business statements showing income, credit commitments, and outgoings.
- Copy of your contract: If available, to support your employment history and income evidence.
- Credit file or credit report: Especially if you have bad credit or adverse credit; this helps lenders understand your credit history and any missed payments.
What Are the Benefits of a CIS Mortgage?
There are several clear benefits:
- Increased borrowing potential: With gross income used, your application can reflect a higher figure than typical self-employed applications.
- Simpler administration: Fewer accounts are needed compared to a self-employed mortgage; you might only need 13 weeks of CIS statements.
- Shorter trading period accepted: Some specialist mortgage brokers can place you with lenders who accept less than one year of trading, which is helpful for newer CIS contractors.
Are CIS Mortgages Available to First-Time Buyers and Home Movers?
Yes! CIS mortgages are available for both first-time buyers and home movers.
Whether you’re looking to remortgage or buy your next property, CIS-friendly lenders can help tailor mortgage deals specifically to your employment status as a CIS registered subcontractor.
Can The Mortgage Pod Get Me a CIS Mortgage?
Absolutely. With over 35 years of experience, we have helped countless CIS workers and self-employed applicants navigate the mortgage market.
As specialist mortgage brokers, we know how to match you with CIS mortgage lenders that understand your income and can maximise your mortgage chances.
FAQ’s
What Is a CIS Mortgage? – Summarised
In short, some mortgage lenders assess an applicant’s CIS earnings as employed rather than self-employed, which can increase maximum affordability on their mortgage application.
Who Is Eligible for a CIS Mortgage?
CIS mortgages are available to applicants registered under the Construction Industry Scheme (CIS) who have income tax deducted at source and want to remortgage or buy a property.
What Deposit Is Required for a CIS Mortgage?
You’ll generally need at least a 5% deposit, though some schemes allow for 0%. A bigger deposit often improves your mortgage deal and lowers the overall cost.
How to Get a CIS Mortgage?
Get Started with The Mortgage Pod today, we offer tailored mortgage advice to help you succeed.
