If you happen to be a CIS, i.e., Construction Industry Scheme contractor, then you can find the right CIS mortgage for you. Usually, it is a bit difficult as most high street banks will prefer that your account is a minimum of 2- or 3-years accounts to offer you a sufficient mortgage.
However, the amount that you borrow on with CIS scheme mortgages can be calculated as per your tax CIS day rate, rather than using an average of the last two year’s self-employed income. You may also consult with Mortgage Experts Online, who are accredited advisors for such mortgages.
The advantage of such CIS mortgages is that any construction industry worker can borrow more than what they can otherwise get the mortgage with any traditional high street lender.
What is a CIS mortgage?
HMRC introduced this CIS plan to allow construction contractors to withdraw any funds from the payments of subcontractors and pay them back to HRMC. The required deductions will then be treated as advances for the tax and social security of the subcontractor.
Therefore, all contractors should register with the system; however, subcontractors need not. In case of subcontractors not logging into the system, then the deductions will be made from their incomes at a much higher rate. Usually, payslips are provided to subcontractors to show their gross income and net income.
How CIS can improve your chances of mortgage
There are several ways to sign up for CIS benefits if you are making a mortgage application.
- One year of accounts
Usually, most of the lenders of CIS mortgage will prefer to look at the gross income that you have been earning for the last 12 months, which means you will not require to have the substantial 3-years of accounts, which most of the traditional mortgage lenders normally take that as basic criteria for any self-employed people.
This means, in reality, you are able to get a mortgage that is as much as two years earlier than what might otherwise be possible.
- Higher mortgage ceiling
To determine your mortgage size, mortgage lenders will try to consider your annual income as the baseline. Typically, any lender will prefer to provide a mortgage that is a maximum of 4 times that of your annual income. Also, there are a few specialists who are willing to offer you five times, and quite a few may even consider six times that of your income mortgages.
- Better deals
Also, if you can show a much higher income level, then it can open up for you to get up to a better rate of the mortgage. It may be quite possible that you may not need the complete four times the mortgage amount and can be happy to go for a slightly smaller figure so that you can get access to a much wider mortgage range, including those with a lower rate of interest.
Besides that, any affordability or your debt-to-income calculation may also be far stronger and go in your favor without any help from any other Construction Industry Scheme.