If you’re on HMRC’s Construction Industry Scheme you may find it difficult to buy a house without a CIS mortgage friendly lender. Read on to see what is actually possible when being paid via CIS, not just what your bank said is possible.
What is a CIS mortgage?
A CIS mortgage is basically just a mortgage from a lender that is more understanding of your income. Most mortgage lenders treat you like a self employed person and require you to prove two years income. The best CIS mortgage lenders just need three months income.
Do I need to have been subbing for two years to get a CIS mortgage?
With most lenders, yes. With subbie-friendly lenders, no.
So long as you’ve been in the trade for 2 years and sub to one firm you can be treated like a normal employee and just use three payslips.
If you have more experience subbing than this you maybe qualify with more lenders, opening up more options and potentially cheaper mortgages.
I’ve been subbing for less than a year, can I get a CIS mortgage?
Yes! So long as you’ve been in the trade for 2 years then you can apply for a CIS mortgage with just three months CIS slips. This is handy if you used to be employed, or doing an apprenticeship, and have recently gone on to CIS. The key is to approach the right lender as most will turn you away until you have two years tax returns.
To qualify you just need to be sub-contracting to only one firm and have your tax deducted at source (the company makes the payment each month, not you at the end of the year).
If you employ yourself via a limited company you may still be able to use your gross CIS income though.
Do I need to have completed my first year’s self-assessment for tax?
Nope. You can be considered on your CIS remittance slips alone.
Will the lender accept my hand written CIS vouchers?
Many lenders won’t accept hand written CIS vouchers. The most CIS friendly lenders will though as they actually understand your industry. They’ll probably just make a call or two to double check they are legit in order to stop people making it up themselves!
How much can I borrow with a CIS mortgage?
A very rough guide would be around 4.5 times your gross (before tax) income. This will get reduced if you have credit commitments like credit card debt or a car loan. The number of children you have can affect what you can borrow.
Most lenders will assess what you can borrow on your earnings over the last two years. A few will look at the last 12 months, but the most CIS friendly mortgage lender will look at your last three months. This is great if you’re earning a lot more now than you were 2 years ago.
How much deposit do I need?
At the moment, 10%. You may be able to buy a home with a 5% deposit under the new government 5% deposit scheme, but it’s unclear if this will include all CIS workers yet.
The larger the deposit you have the more likely you are to be able to get a mortgage.
Are there bad credit CIS mortgages?
As soon as you have credit issues the number of mortgages available to you decreases. If your credit issues were minor, some late payments for example, you might still be in with a shot at getting a mortgage. If not, you’ll probably need a standard mortgage with at least two years accounts.
How much does CIS mortgage advice cost?
I charge a £245 advice fee for CIS mortgages.For this fee I will:
- Collect and review your documents
- Approach a CIS friendly lender to confirm your affordability
- Seek an agreement in principle
- Process you application when you have an offer accepted
The administration fee is collected after our initial appointment. I will also receive commission from the lender. I charge a fee on CIS cases as they can be much more time consuming, and by using a broker with experience with CIS mortgages I can save you time and maximise your borrowing potential. filters out tyre kickers so I can spend more time helping serious home hunters like you.
If your case has added complexity such as a bad credit history or you are buying an unusual property there may be an additional fee, but this would be confirmed before it is incurred. Read more about fees.