How To Get A CIS Contractor Mortgages

CIS Contractor Mortgages will focus on treating you as employed rather than self employed. CIS Mortgages are not available from all lenders.

If you’re a self-employed CIS (Construction Industry Scheme) contractor looking to buy a home or remortgage an existing property, you may be wondering what your options are. CIS contractors can have a harder time getting approved for a mortgage than regular employees, but there are products designed specifically for them. In this article, we’ll explain what CIS Contractor mortgages are, how they work, and what the pros and cons are of getting one.

What are CIS Contractor mortgages?

CIS Contractor mortgages are a type of mortgage designed for self-employed contractors who work in the construction industry. The Construction Industry Scheme is a tax collection scheme for construction workers, where contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs (HMRC). Many construction workers are self-employed and work as subcontractors, which can make it more difficult for them to get a mortgage than regular employees.

CIS Contractor mortgages are designed to take into account the unique financial situation of self-employed contractors. They may have irregular income or be paid in a lump sum at the end of a project, which can make it harder for them to show a steady income and prove their creditworthiness. CIS Contractor mortgages typically require less documentation than regular mortgages, and may be more flexible in terms of income verification.

How do CIS Contractor mortgages work?

CIS Contractor mortgages work similarly to regular mortgages, but they may have different requirements and restrictions. Here are some things to keep in mind if you’re considering a CIS Contractor mortgage:

Deposit: You’ll need to have a deposit to put down on the property you’re buying or remortgaging. The amount of deposit required will depend on the lender and the property value, but it’s usually around 10-15% of the property value.
Income: To get approved for a CIS Contractor mortgage, you’ll need to show that you have a steady income and can afford the mortgage repayments. Some lenders may require you to have been trading for a certain period of time (e.g. two years) and have a certain level of income.
Credit score: Your credit score will be taken into account when you apply for a CIS Contractor mortgage, just like with a regular mortgage. If you have a poor credit score, you may find it harder to get approved or may be offered a higher interest rate.
Interest rates: CIS Contractor mortgages may have higher interest rates than regular mortgages, as they are considered higher risk due to the self-employed nature of the borrower.
Affordability: The lender will assess your affordability based on your income and outgoings. They’ll want to see that you have enough income to cover your mortgage repayments and other expenses.
Documentation: You’ll need to provide documentation to support your application, such as bank statements, tax returns, and invoices. However, some lenders may require less documentation than regular mortgages.

What are the benefits of getting a CIS Contractor mortgage?

Access to mortgage finance: CIS Contractor mortgages can give self-employed contractors access to mortgage finance that they may not be able to get through regular mortgages. This can be especially important for those who are looking to buy their first home or who want to remortgage an existing property.
Flexible income verification: CIS Contractor mortgages may be more flexible in terms of income verification, which can be useful for those who have irregular income or who are paid in a lump sum at the end of a project.
Less documentation required: CIS Contractor mortgages may require less documentation than regular mortgages, which can make the application process quicker and easier.

What are the drawbacks of getting a CIS Contractor mortgage?

Higher interest rates: CIS Contractor mortgages may have higher interest rates than regular mortgages, as they are considered higher risk due to the self-employed nature of the borrower.
Limited lender options: Not all lenders offer CIS Contractor mortgages, which can limit your options and make it harder to find a suitable product.
Limited product options: Some lenders may offer fewer product options for CIS Contractor mortgages, which can limit your ability to find a mortgage that meets your specific needs.
Potentially higher fees: Some lenders may charge higher fees for CIS Contractor mortgages, which can increase the overall cost of the mortgage.
More complex application process: The application process for a CIS Contractor mortgage may be more complex than a regular mortgage, as lenders may require more documentation and income verification.

Is a CIS Contractor mortgage right for you?

If you’re a self-employed CIS contractor looking to buy a home or remortgage an existing property, a CIS Contractor mortgage may be a suitable option for you. However, it’s important to consider the potential drawbacks, such as higher interest rates and limited lender and product options.

Before applying for a CIS Contractor mortgage, it’s a good idea to speak to a mortgage broker or financial advisor who can help you understand the options available to you and find a mortgage that meets your specific needs. They can also help you navigate the application process and ensure that you provide the right documentation and information to the lender.

Final Thoughts

In conclusion, CIS Contractor mortgages can be a useful product for self-employed contractors in the construction industry who are looking to buy a home or remortgage an existing property. They may offer more flexible income verification and require less documentation than regular mortgages, but they may also have higher interest rates and limited lender and product options. Before applying for a CIS Contractor mortgage, it’s important to do your research, speak to a mortgage broker or financial advisor, and ensure that you understand the potential benefits and drawbacks of this type of mortgage.