Are you in the construction industry working in the UK, looking to purchase a property but struggling to find a suitable mortgage? Look no further than CIS mortgages.

CIS is short for ‘Construction Industry Scheme’ and was set up by HM Revenue & Customs (HMRC) as a way for people who work in construction to pay tax.

For those in the construction industry in the UK, obtaining a mortgage can be a daunting task. However, CIS mortgages, also known as Construction Industry Scheme mortgages, have emerged as a viable option for those who may not meet the traditional criteria for a mortgage.

These specialized mortgages are designed for individuals and companies within the construction industry, taking into account the unique payment structures and irregular income that often come with this line of work.

Self-employed individuals and sole traders can find it challenging when applying for a mortgage due to the way lenders calculate affordability based on net profit figures, which then results in being offered a lower mortgage loan.

CIS mortgages are tailored to offer construction industry professionals the flexibility they need. Many lenders understand the irregular income and payment structure that comes with working in construction and are willing to work with applicants on this basis. For example, CIS mortgages allow for irregular payments over a longer period of time than traditional mortgages, allowing for flexible interest rates and repayment plans. This makes a CIS mortgage a great fit for those.

What is CIS, and who is eligible?

A construction worker or businesses that take part in construction work can qualify to be registered on HMRC’s Construction Industry Scheme.

The purpose of the scheme is to allow contractors who work in the construction industry and are registered to the CIS scheme the ability to deduct money from a subcontractor’s pay and pass this directly on to HMRC. These payments are counted as advance payments towards the subcontractor’s tax and national insurance contributions.

A registered subcontractor to CIS will be taxed at the source at 20%. Although it is not compulsory for subcontractors to be registered, it is beneficial to be registered as you will be taxed at a higher rate of 30% if unregistered.

What are the eligibility criteria for CIS mortgages in the UK, and what documentation do you need to apply?

If you’re a construction industry working in the UK interested in obtaining a CIS mortgage, it’s important to understand the eligibility criteria and documentation required to apply. Generally, you will need to be registered with the Construction Industry Scheme and have a proven track record of income within the industry. Additionally, you will need to provide documents such as your tax returns and bank statementsA record of a borrower's financial transactions often requir... to support your application. Lenders may also require a minimum deposit and may have specific requirements for the type of property you can purchase. It’s important to research and compares different CIS mortgage lenders to find one that meets your needs and eligibility criteria. By understanding the eligibility requirements and documentation needed for CIS mortgages, you can increase your chances of obtaining the mortgage you need to purchase a property in the UK.

If you are interested in getting a cis mortgage, you can contact a specialist mortgage broker to help you with your application.

How can I get a mortgage using CIS?

You must be registered on the CIS scheme to qualify for a CIS mortgage. By using CIS as part of your mortgage loan application, lenders will take into consideration your net income, rather than your net profit, as part of their decision on how much you can borrow.

This is extremely beneficial as workers in construction tend to write off expenses such as fuel, tools and other allowable expenses against their income for tax reasons, but this can reduce their net profit amount, which is why lenders may allow less to be borrowed if they are basing income on this figure.

Generally, when applying for a mortgage, you will be required to present three to six months’ worth of CIS payslips and corresponding bank statements. In some cases, you may be required to show more and having more could help strengthen your application. If you are not part of the CIS scheme and don’t have CIS payslips to show, you may find that you’ll need to provide the previous two to three years’ worth of accounts. Lenders will use these payslips and your outgoings to calculate how much they believe you can afford in monthly mortgage repayments and how much they are willing to lend to you.

Just like standard mortgage applicants, you will be required to have a minimum of 5% deposit, although in some cases, lenders may require a higher deposit. The more deposit you have, the better your chances of receiving a mortgage offer, and you may be able to access better deals with better rates.

As usual, lenders will want to verify your address, so make sure you are registered on the electoral roll, as it may cause issues with your application if you are not registered. Lenders will also want to check your credit score, so it is a good idea to check this yourself before your application is submitted so you can check if there are any discrepancies in your credit history or things you can do to improve your score. Your credit score provides lenders with an indication of your reliability as a borrower, so having a strong credit score will be beneficial to your application. If you have a bad credit score, lenders may still be willing to accept you, providing you don’t have defaultsMissed payments on credit accounts, which can affect a borro... and CCJs in the previous 24 months. This will be assessed on a case-by-case basis, and lenders will base their decision on the severity of your adverse credit.

What are the latest mortgage updates on CIS mortgage schemes in the UK?

While there is limited publicly available data on CIS mortgages in the UK, here are a few statistics that provide some insight into their prevalence and impact:

1. According to a 2019 report by the National Custom and Self Build Association, self-employed workers make up around 15% of the UK’s workforce, many of whom work in the construction industry. CIS mortgages provide an option for these workers to obtain a mortgage despite irregular income.
2. According to a 2020 report by mortgage centres, some CIS mortgage lenders see an increase in demand for these specialized mortgages as more individuals and companies in the construction industry look to invest in property.
3. While interest rates and deposit requirements for CIS mortgages can vary depending on the lender and individual circumstances, some lenders offer competitive rates and lower deposit requirements than traditional mortgages.

Overall, while CIS mortgages may not be as widely known or used as traditional mortgages, they provide a valuable option for those in the construction industry looking to purchase property in the UK despite irregular income or other challenges.

What are some tips for finding the best CIS mortgage lenders in the UK, and what factors should you consider when comparing offers?

When it comes to finding the best CIS mortgage lenders in the UK, it can be overwhelming to navigate the different options available. However, there are some tips you can follow to help you find the right lender for your needs. First, research and compare the interest rates and repayment terms offered by different CIS mortgage lenders. Look for lenders that offer competitive rates and flexible repayment options. Additionally, consider the level of customer service provided by each lender, as well as any fees or charges associated with the mortgage. You may also want to read online reviews or ask for recommendations from others in the construction industry. It’s important to choose a lender that you trust and feel comfortable working with, as obtaining a CIS mortgage can be a complex process. By taking the time to research and compare different CIS mortgage lenders, you can increase your chances of finding the right mortgage for your needs and achieving your property ownership goals.

Case Studies

As a mortgage broker in the UK, I have seen first-hand how CIS mortgages have helped individuals and companies in the construction industry achieve their property ownership goals. One example is a self-employed builder who was struggling to obtain a traditional mortgage due to irregular income. However, by applying for a CIS mortgage, he was able to provide documentation of his income through the Construction Industry Scheme and secure the mortgage he needed to purchase a property. Another example is a construction company that wanted to invest in property for rental income. By obtaining a CIS mortgage, they were able to secure the funding needed to purchase multiple properties and build a successful rental portfolio.

CIS mortgages have also helped individuals and companies with less-than-perfect credit scores or limited deposit funds. For instance, a subcontractorA person or company hired by a contractor to perform a speci... who had previously struggled with debt was able to obtain a CIS mortgage with a lower deposit requirement and more flexible repayment terms, helping them get back on track financially.

Overall, CIS mortgages have proven to be a valuable option for those in the construction industry looking to purchase property in the UK. Whether you’re self-employed, own a construction company, or have less-than-perfect credit, there may be a CIS mortgage option that suits your needs. As a mortgage broker, I am committed to helping my clients find the right mortgage solution for their unique circumstances and goals.

Next steps

Being a contractor and self-employed or a sole trader can make trying to get a mortgage more complicated, and lender’s requirements can vary from lender to lender. We have access to a whole of the market of lenders, both on and off the high street, including specialist lenders. Speaking with one of our mortgage brokers who can look at your personal circumstances and help advise you on the lenders and products most suited for you can save you time and hassle.

FAQs

Can I get a construction industry scheme mortgage in the UK?

Yes, you can get a Construction Industry Scheme (CIS) mortgage in the UK. CIS mortgages are specially tailored to meet the needs of self-employed contractors and sole traders operating within the construction industry. They offer more flexible repayment terms and lower deposit requirements than traditional mortgage products, making them an ideal option for those with irregular income or less-than-perfect credit scores. Before applying for a CIS mortgage, make sure to research and compare different lenders to find the one that best suits your needs. We would advise you to hire an experienced broker to help you with your mortgage application process.

What documents do I need to apply for a CIS mortgage?

When applying for a CIS mortgage in the UK, you will need to provide documentation of your income through the Construction Industry Scheme. This includes proof of your monthly gross contract payments, which can be obtained from HMRC or your contractor. You will also need to provide proof of identity, proof of addressEvidence of a borrower's current address, such as a utility ..., and bank statements for the past three months. For more details, you can contact a market broker to provide you with mortgage options from different lenders.

Can I get a cis mortgage with a bad credit score?

Yes, you can get a mortgage with a bad credit score also, but you may need to compromise on mortgage rates.

Can I get a mortgage without having an annual income?

Yes, you can still get a mortgage without having an annual income if you are self-employed or a sole trader. Many lenders now offer CIS mortgages which take into account other sources of income, such as dividends and rental income, for those who cannot provide proof of regular wages. You may also be able to apply for a specialist loan that does not require any proof of income. However, it is important to be aware that these loans may have higher interest rates and more stringent repayment terms.