Construction Industry Scheme
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What is a CIS Mortgage?
Kevin Dunks explains how the mortgage process works if you are a CIS worker.
What is a CIS mortgage and how does it work? Is this a specific product?
CIS is short for the Construction Industry Scheme for subcontractors, who are often referred to as ‘subbies’ in the industry.
Some lenders treat CIS workers as employed, under their criteria. This is what I would describe as a CIS mortgage. They’ll use your day rate, multiplied by the number of days you work, and most importantly, use your gross income – without any deductions for tax, tools, expenses, etc.
Who is eligible for a CIS mortgage?
As long as you’re a CIS worker under the scheme and you’ve got three months worth of continuous payments into your bank account, you’ll be eligible.
Can self-employed workers apply for a CIS mortgage?
It’s probably worth noting that all CIS workers are self-employed. But the key requirement for eligibility is to be paid under the CIS scheme.
The greatest benefit is that some lenders will treat the CIS worker as employed under their criteria. That means they will use your gross income before taxes and deductions for tools, van, fuel, etc. – which allows you to borrow more to meet your objectives.
What are the benefits of a CIS mortgage compared to a regular mortgage?
The major benefit is the lender using your gross income before taxes and expenses, which allows you to borrow more.
Another benefit is that it’s easier. You don’t need to provide self-employed accounts nor have a two years’ record, which lenders usually require.
Also, if your day rate has risen recently, on a CIS mortgage you’d be able to use that increased rate. If it went through as a traditional self-employed mortgage you couldn’t, as the income lenders use is more historic.
How much employment history do you need for a CIS mortgage?
You need to have three months continuous CIS payments into your bank account. It’s as simple as that.
They do like you to have some history in the trades, but on CIS, you just need three months’ pay slips and corresponding credits into your bank account.
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We will save you time by researching the market, checking that you meet the lenders criteria to find the best mortgage for your circumstance.
How do the interest rates and fees associated with the CIS mortgage compare to those of a traditional mortgage?
They’re the same. There’s no extra charge imposed by a lender for a CIS mortgage. It’s just whether the CIS mortgage is acceptable to a lender.
There are fewer lenders that treat a CIS worker as employed under the criteria, though, so it reduces the pool. But with those lenders, it’s exactly the same as if you were a conventional employee or you were self-employed.
The criteria can feel like a secret – and many brokers don’t know it – but we can secure high street deals for most CIS workers.
What documents are required to apply for a mortgage as a CIS worker?
You will need your latest three consecutive months’ payslips, invoices and bank statements at the time of application. You’ll also need corresponding bank statements to show the income going in.
Also, if you’ve changed the contractor you’re working for, that’s fine.
How can someone find a reputable lender who offers CIS mortgages?
To find the right CIS mortgage for you, you’re likely to need a good, knowledgeable broker on your side. When it comes to CIS mortgages, we understand lenders’ criteria inside and out and have secured hundreds of mortgages for subcontractors over the years.
Are there any other unique features or requirements of a CIS mortgage that borrowers should be aware of?
I wouldn’t necessarily describe them as features, but there are certain things to be aware of. If you go on a two or three week holiday, for example, it’s going to impact your earnings over a three month period. In turn, that’s going to impact how much you could borrow.
On the flip side, if you’re working six days a week and doing some overtime, that will increase your borrowing capacity.
You can use your gross income before taxes and expenses as a CIS worker, which ultimately allows you to borrow more to achieve your objectives.
How can a mortgage broker help here?
An experienced broker with lots of experience in CIS mortgages could be invaluable. It’s key in achieving your objectives to get the right mortgage for you.
To find out how much you can borrow and all the costs involved, start with a chat with an expert broker. We listen to your plans and will chat over the finer details of your circumstances, before going off to research the marketplace and find the right solution for you. That will give you the confidence to achieve your goals.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
Are you struggling to be able to borrow enough to achieve your objectives because of the expenses you have written off to reduce your tax? We know what feels like ‘secret criteria’. This allows us to get you high street mortgage deals using your GROSS day rate shown on your pay slips.
Whether you are a first time buyer, moving home or remortgaging, it will be best to speak with a specialist CIS mortgage adviser who will chat over your intentions and ensure you get the best mortgage you can.
If you answer yes to the following questions you will be eligible for a CIS mortgage:
- Are you a self employed plumber, carpenter, electrician, builder, decorator or bricklayer working within the construction industry?
- Does the construction firm you work for deduct 20% off your salary for tax?
What now? Chat with an experienced CIS mortgage expert on 01273 736536 or contact us here.
No, we are independent mortgage advisers and will be able to secure the best mortgage for your circumstance and objectives. These include exclusive mortgage deals from High Street lenders.
You will need the following:
- 3 months CIS pay slips with corresponding bank statements
- At least a 5% deposit
To find out what is possible for you please chat with an experienced CIS expert on 01273 736536 or contact us here.
We know what seems like a ‘secret’ criteria that benefits CIS workers. As a construction industry sub-contractor most mortgage lenders will treat you as a self-employed person and only look at your net income after deductions of expenses such as petrol, tools, van maintenance etc, that you claim against for tax purposes. This reduces the amount you are able to borrow.
Our CIS mortgage specialists know a couple of lenders who will treat you as employed due to your status as ‘self employed under the CIS scheme’. This frequently enables you to borrow more on your mortgage as they take in to account your PRE tax earnings before the expenses and tax. You still want to make sure the monthly payments are affordable, speak with a CIS mortgage expert now on 01273 736536 or contact us here.
An Agreement in Principle, also known as a ‘Decision in Principle’ will be provided after affordability and credit checks have been approved. An Agreement in Principle is extremely useful to increase your confidence when viewing and offering on properties. Estate Agents will typically want to see an Agreement in Principle before presenting your offer to the seller. Our personal CIS mortgage advisers can help you with this.
Your monthly payments will vary according to the chosen mortgage term, choice of product and level of deposit. It is best to chat with a personal CIS mortgage specialist to find out exactly what interest rate and term you can secure to give an accurate monthly cost.