Construction workers might be eligible to get a mortgage through the Construction Industry Scheme. A CIS mortgage could be an option if your three-year credit history is not good enough or your monthly salary is too low. This guide will help you decide if a CIS Mortgage is right for your needs.
If you’re ready to apply for a mortgage, we will be happy to put you in touch with a mortgage expert.
What is a CIS Loan?
HMRC created the Construction Industry Scheme to allow contractors to withdraw funds from subcontractor payments and then pay them to HRMC. The subcontractor would be entitled to deductions that could then be used as advances towards their tax and social insurance.
Subcontractors don’t need to register but contractors do. Subcontractors will not be able to log in to the system and the deductions from their earnings will be at a higher percentage. Subcontractors are often provided with pay slips showing their net and gross income.
Construction Industry Scheme
Construction Industry Scheme CIS), Contractors Take money out of a Subcontractor payments and transfer it to HM Revenue and Customs HMRC).
The deductions can be considered as advance payments towards the subcontractor’s tax or National Insurance.
What is the process for CIS mortgages?
CIS mortgages are useful for those who are self-employed. Much sole proprietorship allows them to write off as much income as they can to pay fewer taxes.
Mortgage amounts offered are usually lower than anticipated because lenders rate affordability based upon net earnings.
Lenders can calculate affordability with a CIS mortgage by using gross income numbers, rather than net income figures. It can help increase your mortgage loan amount.
How much can I borrow to obtain a CIS mortgage?
Based on your average annual income, the lender will calculate your creditworthiness. To calculate your creditworthiness, lenders will require 12 months of pay stubs or 3-6 monthly pay stubs based on your most recent pay slips. Both cases will require that lenders calculate your average annual income using the gross amounts.
Lenders will first determine what your average annual income is and then they will give you a loan amount according to their criteria. Lenders are known to lend up to 45 percent of the applicant’s annual earnings.
All financial arrangements, including loans, mortgages, or outstanding credit cards, are also taken into consideration.
What is the minimum deposit required for a CIS Mortgage?
A higher mortgage deposit will allow you to choose between lower mortgage rates. You can get a mortgage even if you have a deposit of only 5%
Mortgage rates can be higher for those with larger deposits. It is best to deposit 15 dollars, but higher amounts are a bonus.
What happens if I have poor credit?
Lenders may approve a bad credit CIS loan if you have poor credit. Advisors who specialize in bad credit can provide more detailed explanations.
Ask for help mortgage experts online can call you back.
How is the CIS-mortgage calculated?
Most lenders will require 3, 6, or 12-months of pay slips. Lenders might consider you self-employed, and they may ask to see the last 2 years of your accounts.
Is it possible to obtain a mortgage as an independent contractor?
Contractors may have a difficult time getting a mortgage. Many lenders do not understand the income calculation of contractors.
But, lenders will still consider you employed if your weekly gross income is greater than one. This can make a big difference in the amount you can borrow.
How can a specialist CIS Mortgage broker help?
Assess your application quickly
For the best mortgage offer, make sure you package your application for the right lender.
Because mortgage experts online specialize in CIS Mortgages, we are likely to have seen your problem before and can solve it. Our CIS mortgages experts will go through the mortgage process step by step with you.