How Much Can I borrow for a CIS Mortgage?

The lender calculates your creditworthiness based on your average annual income. To do this, lenders will request 12 months or 3-6 month pay stubs from your most recent payslips. In both cases, lenders use the gross amounts to calculate your average annual income.

After lenders determine your average annual income, they will offer you a loan amount based on their criteria. Lenders typically lend up to 45 times the applicant’s annual income.

Your expenses are noted as well as any other financial arrangements you have such as loans, mortgages, and outstanding credit cards.

How much deposit is required for a CIS mortgage?

With a higher mortgage deposit, you can certainly choose between better mortgage rates. It is possible to get a mortgage with a deposit of 5%.

Larger deposits often result in better mortgage rates. If possible, a deposit of 15 would be ideal and anything higher is a bonus.

Do I need an accountant for getting a CIS Mortgage?

If you are registered in the system, lenders only need your payslips as proof of your income.

Alternatively, if you are not registered, you may need to submit accounts for at least one year in addition to an SA302. Other lenders require at least three years of professional experience.

If you are not a subscriber, your affordability will be based on your reported net income numbers. As a result, the maximum amount of your mortgage will be less compared to registering with the CIS. This can be beneficial for self-employed construction workers.

The Benefits of Owning a Home as a CIS Contractor

• Financial Stability: Owning a home can provide a sense of financial security and stability.
• Investment Opportunity: Property prices can appreciate over time, potentially leading to financial gains.
• Tax Benefits: Homeownership may qualify you for certain tax benefits, such as mortgage interest relief.
• Improved Quality of Life: Owning your own home can offer a better quality of life and provide a sense of belonging.

Challenges Specific to CIS Contractors

• Income Fluctuations: The irregular nature of CIS income can make it difficult to demonstrate affordability to lenders.
• Short-Term Contracts: Short-term contracts may raise concerns about your ability to maintain mortgage payments.
• Limited Savings: Self-employed contractors may have limited opportunities to save for a deposit.

Overcoming Challenges

• Build a Strong Credit History: Establish a positive credit history by using credit responsibly and paying bills on time.
• Save for a Deposit: Aim to save as much as possible for a deposit, even if it takes time.
• Consider Government Schemes: Explore government-backed initiatives like Help to Buy or Shared Ownership to make homeownership more accessible.
• Negotiate with Lenders: Don’t be afraid to negotiate with lenders to secure the best possible deal.

What if I have bad credit?

If you need a bad credit CIS mortgage, there may be some lenders willing to approve it. Generally whether you can get a mortgage with bad credit will depend on:

• How long ago the bad credit was
• What it was for
• How much it was for
• Is it paid off

How is a cis mortgage calculated?

Most lenders will ask for either, 3, 6 or 12 months of payslips and will then multiply that by between 4.5 and 5.5x to give you a maximum amount you can borrow.

Some lenders may treat you as self employed in which case they will usually want to see your latest 2 years accounts. However, some lenders are more subcontractor-friendly, using your gross income rather than your net income.

Can I get a mortgage with 3 months CIS?

Generally lenders tend to want 6 months of payslips for a CIS Mortgage. However, you may be able to get a mortgage with as little as 3 months payslips as a CIS worker.

Only a few lenders will consider CIS workers with so few payslips, and most will treat you as self employed and want a few years of trading, so it’s worth speaking to a specialist mortgage broker who can go through your options.

Can subcontractors get a mortgage?

Subcontractors can find it difficult to get a mortgage. This mostly comes down to the fact that most lenders will think of them as self employed and require 2 years plus of evidence of income.

However, there are lenders that will consider as little as three months of evidence of payslips for a CIS Mortgage.

Is CIS classed as employed?

This will depend on the lender. Most lenders do consider CIS as self employed. However, some lenders will treat you as employed, and multiply an average of your weekly gross income in order to work out how much you can borrow.

This can work out very beneficial for CIS contractors to get a better maximum loan, or a better affordability for their mortgage.

Is it hard to get a mortgage with CIS as a contractor?

Contractors can find it incredibly difficult to get a mortgage. This is down to a lot of lenders not really understanding how their income is calculated.

However, there are a few lenders that will consider you employed and base your income on a multiple of your gross weekly income. This can make a huge difference to the amount you can borrow.

CIS Mortgage Calculator

At Albion Forest Mortgages we have a specific CIS mortgage calculator designed to give CIS workers a more accurate idea of how much they can borrow. This is because it uses your day rate to calculate your borrowing power rather than an average of 2 years Tax calculations or SA302’s.

If you would like a more accurate figure, get in touch, it will usually take us less than 10 minutes to tell you. (And we won’t charge you a penny to do so.)

CIS Mortgage lenders

There are many different lenders for CIS workers, and which one is right for you will depend on your entire situation.

For a full list of lenders we use get in touch to discuss your options.

Frequently Asked Questions

• Can I get a mortgage with a small deposit as a CIS contractor?
  • While a larger deposit can improve your chances, some lenders offer mortgages with smaller deposits.
• What documents do I need to apply for a CIS mortgage?
  • Typically, you’ll need to provide your CIS registration details, tax returns, bank statements, and proof of identity.
• How long does it take to get approved for a CIS mortgage?
  • The approval process can vary depending on the lender and the complexity of your application. However, it’s generally recommended to start planning well in advance.
• Can I get a mortgage if I’m new to the CIS?
  • While it may be more challenging, it’s possible to secure a mortgage if you’re new to the CIS. Providing evidence of your income and financial stability can help.

By understanding the unique challenges and opportunities faced by CIS contractors, you can take steps to improve your mortgage prospects and achieve your homeownership goals.