Who Can Apply for a CIS Mortgage?
The CIS covers a lot of work in construction, including site prep, decoration and refurbishment. You’ll likely qualify if you work in:
- Site prep – laying foundations, etc.
- Building work
- Alterations & repairs
- Installing heating, lighting, water, power or ventilation systems
- Construction follow-up (cleaning inside the buildings once a project has finished)
There is work that is exempt from the CIS, however:
- Scaffolding hire (without labour)
- Carpet fitting
- Material delivery
- Non-construction site work (canteen work, etc.)
- Surveying and architecture
- Material manufacture for construction
There are some exceptions to these rules. Say, for example, an architect who also helps with the manual building work – they would be covered by the CIS as they’re working in both groups.
It can be really tricky to determine whether or not you’ll qualify for a CIS mortgage. We recommend getting in touch with specialists who can advise on whether or not you’re eligible, and how much you can borrow.
What are the Benefits of a CIS Mortgage?
CIS mortgages are perfect for construction workers who either don’t have three years of accounts, or who have declared a low net profit on their tax return.
Get a Higher Mortgage Ceiling
By seeking a CIS mortgage, you might be able to snag yourself a significantly larger mortgage than you otherwise might have.
Say, for example, you earned £60,000 in a year, but after declaring your travel expenses and working with your accountant, you end up declaring £38,000. A mortgage lender would take the £38,000 and allow you to borrow a maximum of £152,000 (£38,000 x 4).
In the same situation, but through the CIS, you’d declare your gross income before tax, making your buying power a hefty £240,000 (£60,000 x 4) at a minimum; that’s an increase of £88,000 – not bad!
One Year vs Three Years of Accounts
Lots of lenders will request (on average) 3 years’ accounts for self-employed people or contractors. This can be frustrating, as it can severely delay your mortgage application. With a CIS mortgage, you’ll usually only need to show your gross income from the last 12 months, meaning you can get yourself on the ladder much sooner.
Deposits in CIS Mortgages
A CIS mortgage isn’t anything special, it’s still a normal mortgage, with the only difference being that your gross income is considered.
This means that the deposit that you’ll need will be exactly the same as any other mortgage. If you’ve got a strong employment history, you might be able to find a mortgage with a small deposit of 5%, however, we always recommend trying to overshoot the minimum deposit of any mortgage. If possible, saving for a 10-20% (or more) deposit will always work in your favour, putting you in prime position to shop around for a more favourable deal.
Depending on the size of house that you’re after, you could even decide to borrow less than your maximum allowance, making your deposit a larger percentage and putting you in an even stronger position.
Apply for a CIS Mortgage with The Mortgage Heroes
Phew, that’s a lot to take in! At The Mortgage Heroes, we help people working in construction to find the most suitable mortgage all year round. It’s completely normal to get a little lost when looking for a mortgage, especially if you’re trying to fulfil specific criteria (such as the CIS).
For help finding the most suitable mortgage, or to get a little more information, contact our heroes today! We’re available seven days a week, so there’s never a bad day to give us a call!