Construction Industry Scheme Mortgages

What is the Construction Industry Scheme?

Introduced by HMRC, the Construction Industry Scheme (CIS) – also known as being ‘cards in’ – allows contractors to take money from a subcontractor’s wage and pay it directly to HMRC instead. These payments are looked at as advanced payments towards tax and National Insurance. 

How do I know if I’m in the scheme?

There are two key questions to ask yourself:

1. Are you self-employed and working in the construction industry?
2. Do you do work for a company who deducts 20% of your pay for tax?

If you can answer ‘yes’ to both of these questions, then you’re likely paid through the Construction Industry Scheme.

What is a Construction Industry Scheme mortgage?

There isn’t a specific mortgage for CIS workers. Rather, being cards in means most lenders will treat you as self-employed. 

How is my income assessed?

If lenders see you as self-employed, they will require at least two full years’ tax calculations to verify your income.

That can cause a few problems. For example, what if you don’t have two years’ history in the industry yet?

Thankfully, some lenders understand this, and will look at your CIS income vouchers to calculate your earnings. This may be over a three, six, or even twelve month period. Others will take your day rate and, as long as the documents support it, assume a five-day working week and a 46-week working year. This approach could let you borrow significantly more than would be permitted off your tax returns.

Lenders might still want to see past and future contracts. They recognise that CIS workers often don’t stay with the same company for long, maybe just for the duration of a project. Past contracts prove job history, and experience often leads to more work. Future contracts help them see you’ve got steady work, and therefore ongoing income, lined up.

How much can I borrow?

It varies from lender to lender. They all use a different calculation when figuring out what they are prepared to lend. Each one will factor in your income and expenditure, as well as things like the number of children you have.

They also have different criteria that determines whether or not you are eligible. If your case doesn’t fit with one lender, it might with another.

This is where a mortgage broker like us comes in handy. Our job is to know the lenders’ criteria and to match you up with someone who will consider you. We can compare deals from dozens of lenders, too, so you know you’re getting the best possible mortgage for you.

What deposit do I need for a Construction Industry Scheme mortgage?

It depends on your personal situation.

Put down the largest deposit you can. You will need to borrow less, which results in smaller monthly repayments or borrowing the money for a shorter period of time.

The smallest deposit is usually 5% of the agreed purchase price. You may need a bigger deposit, for example if you have bad credit.

For a better idea of how much deposit you will need, speak to a mortgage advisor like us.

How can The Mortgage Store Chorley help CIS workers?

At The Mortgage Store Chorley, we know CIS workers like you can have trouble getting a mortgage because you might earn irregularly and work for yourself. We know how CIS pay works and can help with paperwork and proving income. We’ll help you show your finances in the best way to get approved for the mortgage you need.

We can also find mortgages made for CIS workers like you. We’ll think about things like how long your contracts are, and how your income might vary from month to month. With our help and knowledge, we can make applying for a mortgage a smooth and stress-free process.

Although we’re based in Lancashire, we can help no matter whereabouts in the UK you are, with phone and video appointments available. Contact us today to book your initial consultation.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE