Buying a house with the Construction Industry Scheme (CIS)
As a sole trader or self-employed individual, your income structure may differ from those in traditional employment. When you apply for a mortgage, your declared income may be considerably lower than your overall turnover. With the CIS, lenders view your income as pre-tax gross income, rather than your final post-tax profit.
At Mortgage Synergy, we’ve got a team of expert mortgage brokers who understand the needs of different professions. They will use their knowledge and experience to find the most suitable mortgage for your circumstances.
What is a CIS Mortgage?
There is not an official ‘CIS mortgage’ product; it’s a standard mortgage where your income is assessed differently because of the Construction Industry Scheme (CIS). Your full turnover is considered rather than your sole-trader profit.
How does a CIS mortgage work?
Commonly, CIS workers have struggled to get a mortgage because of their gross and net income. As CIS workers are often self-employed, you might write off your expenses to reduce taxes. However, this means your overall net income is lower.
This can create challenges when applying for a mortgage, as your net profit (the amount shown on your tax return) is often much lower than your actual earnings or day rate. This can reduce your borrowing power.
However, with a CIS mortgage, lenders consider your gross income, which improves your affordability options. Some lenders will even treat you as if you’re employed, using your day rate or gross income to assess affordability — and may only require as little as 3 months’ worth of CIS statements as proof of income.
It works in the same way as a first-time buyer mortgage — the only difference is our team must consider your occupation when providing information and advice.
Who is eligible for a CIS mortgage?
You’re eligible for a CIS mortgage if you’re self-employed in the construction industry. This is not limited to those directly involved in the physical construction of buildings, but also includes a number of sectors connected to the industry, such as planners and architects.
You may qualify for a CIS mortgage if you:
- Are self-employed in the construction industry (builder, decorator, electrician, etc.)
- Are paid through CIS, with 20% tax deducted at source
- Are above age 18
- Have worked in the industry for at least 12 months
- Have worked for the same employer for 3+ months (no more than 3 employers in the past 12 months).
Lenders may actually require you to have worked in the construction industry for two years, either employed or self-employed, but it depends on the lender and their specific criteria.
As long as you’re on the CIS scheme and have at least 3 months’ worth of continuous payments, we can help you find the right mortgage for you. We’ll carry out affordability checks, so don’t worry if you’ve had poor credit or you’re yet to complete a self-assessed tax return, our mortgage brokers will lend a helping hand.
How much can I borrow for a CIS mortgage?
How much a lender allows you to borrow depends on your specific circumstances, such as your current earnings, financial history and credit score.
Most lenders provide up to 4 times your annual income. With a CIS mortgage, there are some lenders who allow you to borrow more as they base your affordability on the last 3 months’ CIS payslips.
Our brokers will assess your affordability and help you understand how much you can borrow — based on your income, credit history, and recent payslips.
Get in touch
Tell us about your mortgage requirements and one of our specialist advisors will be in touch within 24 hours.
The benefits of a CIS mortgage
Higher borrowing power
Since lenders look at your gross income rather than net, you may be able to borrow more if you’re a CIS member. The scheme more accurately reflects your earnings, helping you borrow more for a property. It also increases your chances of being accepted.
Better rates and deals
If you’re eligible to borrow more, you can often get access to better deals than you might have without the CIS. This can help you afford a larger property or have more flexibility with the mortgage options available, as well as terms and conditions.
Applying with fewer accounts
Most mortgage lenders require one to two years’ worth of annual accounts to approve your mortgage application. With a CIS mortgage, we typically see lenders requiring only three months’ worth of your CIS statements/payslips.
Your mortgage affordability will be based on your average income in these three months, which can be particularly promising if you’ve completed several projects or taken overtime during those three months.
To compare with self-employed mortgages, for example, some lenders ask for three years of accounts, which can make it a longer process to get a mortgage.
If you’re ready to get your CIS mortgage arranged, get in touch with us — we’re here to help.
Your home may be repossessed if you do not keep up repayments on your mortgage.