Mortgages for Construction Industry Scheme Workers

To apply for a CIS mortgage, you will need to have:

• CIS payslips for the last six months.
• Demonstrate that tax has been deducted by your contractor at the standard 20% rate.
• A minimum 5% deposit to put down on the property.

If you are looking for a mortgage from a mainstream lender, securing a competitive mortgage as a contractor can be tough.

However, working with a broker who is experienced in the sector makes the process much more manageable. Generally speaking, self-employed mortgages are more complicated as many sole traders will reduce their net profit by writing off tax-deductible expenses before submitting their self-assessment tax return.

The impact is that you correctly reduce your tax obligations, but in turn, your accounts and tax returns reflect a lower income than your actual wages and, therefore, can restrict the amount you can borrow.

Using a mortgage lender familiar with the CIS scheme enables you to use the gross income figures shown on your CIS payslips, hence needing six months worth of payslips to evidence your regular income.

Should your contractor deduct tax from your wages at a higher 30% rate, then you may also be asked to provide copies of your business accounts.

As self-employment becomes more popular, you can find contractor mortgages with many banks and building societies.

However, it is always worth consulting an experienced broker before making an application, as there may be much more favourable rates available from niche lenders who specialise in this sort of lending.

Particularly if you fall outside of the 'standard' eligibility criteria, a broker is almost sure to be able to find you a better deal - this could include:

Revolution Brokers have years of experience in negotiating terms on a wide range of self-employment mortgages and can present your borrowing requirements to any of thousands of lenders.

• Having been trading for less than three years.
• Having a complicated income structure.

Most lenders familiar with CIS income will use an income calculation to decide how much they can lend you.

The relevant figure is called the 'value of measured work' - so let's take the below as an illustration of a monthly payslip:

In this example, the value of measured work is £4,275 - the gross amount earned. Mortgage providers will add the value of measured work, usually over the last year, and then calculate the average to work out your annual income.

Most lenders can offer up to four times your annual earnings, although this depends on other circumstances. If you have other obligations such as debts, loans or mortgages, then the monthly repayments will be deducted from your income before making this calculation.

Say this CIS contractor earned the same amount every month, then their annual income would be £51,300, and most lenders would offer a mortgage up to a maximum of £205,200.

Not all banks will offer CIS mortgages, so applying straight to your usual banking provider isn't often the right solution.

The best lenders for CIS mortgages will regularly lend to self-employed people, and be familiar with the scheme and how that impacts the values shown on your payslips and self-assessment tax returns.

Usually, a CIS scheme mortgage will allow you to prove your income from your payslips (before deductions), which means you won't always be asked to provide SA302 forms or filed accounts as you might for another self-employed mortgage.

This system is also handy if you've been self-employed for less than two years and can therefore demonstrate a steady income even if you don't have sets of accounts going back further!

However, choosing the right lender depends heavily on how much you wish to borrow and aligning your circumstances with a CIS mortgage provider - hence the need for an independent broker.

There isn't a one-size-fits-all solution to the right self-employed CIS mortgage - as a whole-of-market broker, our job is to assess your borrowing requirements and provide tailored advice to ensure you apply to the best-suited provider.

Each mortgage assessment is bespoke, so it's essential to know how the lender calculates your average monthly income and what that means for the maximum mortgage value they will offer.

Therefore, Revolution Brokers run through an initial assessment, work out which lenders will offer you the most competitive rates, and help negotiate throughout the application process to ensure you're getting the best possible deal.