Why CIS Contractors Need Specialised Mortgage Help: Exploring Your Options
Are you a self-employed CIS contractor looking to buy a home? If so, you may know how challenging it can be to secure a mortgage that meets your needs. As a self-employed individual, you face unique challenges that can make it more difficult to qualify for a mortgage. You may be struggling to prove your income or provide the right documentation. But fear not! With the right advice and guidance, you can find a mortgage that works for you. In this post, we’ll explore the top questions you should be asking as a CIS contractor and provide some helpful tips to make your home buying journey smoother. So, let’s dive in!
As a CIS contractor, getting a mortgage can be a challenging process. Unlike a regular employee, you don’t have a regular paycheck, which means traditional lenders may be hesitant to approve your application. Additionally, your declared income may be significantly lower than your overall turnover, which can further complicate the process.
However, all hope is not lost. As a CIS contractor, you have access to certain schemes and benefits that can help you get a mortgage. In this post, we’ll explore some of the key questions you need to ask as a CIS contractor when applying for a mortgage.
What is a CIS mortgage?
Contrary to what many people believe, there is no such thing as a “CIS mortgage”. Instead, the Construction Industry Scheme (CIS) is a tax deduction scheme for subcontractors and contractors working in the construction industry. By deducting tax at source, CIS aims to prevent tax evasion in the construction industry.
While CIS itself doesn’t offer mortgages, being a CIS contractor can help you get a mortgage. The reason for this is that CIS contractors can present their earnings as pre-tax gross income, rather than final post-tax profit. This means that certain lenders may view you as an employed individual, which can make the application process less stringent.
How is a CIS mortgage calculated?
Mortgage lenders will generally use your annual income to determine how much they could lend you. Most lenders will offer between 4.5 and 5.5 times your annual income. However, if you are offsetting your expenses from your annual income, these expenses will also be deducted prior to your loan being calculated.
Additionally, most lenders will only request evidence from the past twelve months, which is helpful if you’re a new business and don’t yet have 24-36 months worth of accounts. Preferential mortgage deals may also be available to individuals who have a higher income, so being able to prove a higher income to a lender could get you a better interest rate.
Can I get a mortgage with CIS statements?
Yes, you can. CIS statements are a useful tool for demonstrating your income as a CIS contractor. However, it’s important to note that not all lenders will accept CIS statements. Therefore, it’s essential to work with a specialist mortgage broker who can help you find a lender who understands the construction industry and is willing to work with CIS contractors.
Can you get a mortgage as a sub-contractor?
Yes, you can. As a subcontractor, you have the same rights and access to mortgage products as a contractor. However, it’s important to note that being a subcontractor can sometimes make the application process more complicated. Some lenders may prefer to work with contractors, while others may not understand the intricacies of the construction industry.
Is it difficult getting a mortgage as a contractor?
Getting a mortgage as a contractor can be challenging, but it’s not impossible. However, the process can be complicated, and it’s important to work with a specialist mortgage broker who has experience working with CIS contractors.
Working with a specialist mortgage broker
Working with a specialist mortgage broker is crucial for CIS contractors who want to get a mortgage. A specialist broker will have experience working with CIS contractors and can help you find a lender who understands the construction industry and is willing to work with you.
At Prospect Tree, we have a team of specialist mortgage brokers who have years of experience working with CIS contractors. We understand the complexities of the construction industry and can help you find the right mortgage product for your needs.
Getting a mortgage as a CIS contractor can be a complex process, but it’s not impossible. By asking the right questions!
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