If you work in the construction industry, you likely have registered for the Construction Industry Scheme (CIS). Under the scheme, contractors deduct money from subcontractors’ payments and pay them to HM Revenue and Customs. These payments are meant to be advance tax payments and payments for National Insurance. If you are already registered for the scheme and need to purchase a home or property, you can get a mortgage specifically tailored to CIS workers.
Why You Need a CIS Mortgage
When applying for a mortgage, most lenders will look at your yearly income. The only problem is that construction workers under CIS will report a lower income than what they actually earned. This is because the amount of money they take home will be less by what was deducted for the scheme. To get an accurate mortgage amount, you need to present a gross income amount before the deduction.
This is what CIS mortgage lenders look at and this ensures you get an accurate mortgage amount depending on how much you actually make, and not how much you self-report after the deductions to CIS.
Who Is Eligible?
Anyone who is registered under the scheme is eligible for CIS mortgages depending on the conditions set out by individual lenders. However, remember that lenders will treat you as self-employed and might use the lower amount as discussed above. Even if a lender says you are eligible, it is always a good idea to check if they will treat you as employed so they can use the higher figure and you can get the amount you need.
About Your Deposit
A CIS mortgage is not different from any other type of mortgage. This means that you will not have to worry about a larger-than-normal deposit. With a strong employment history and the correct employment and income documentation, expect deposits in the 5-15% range. As with other types of mortgages, the higher the deposit you pay, the cheaper the mortgage will be overall, so it’s a good idea to save as much as you can to pay a bigger deposit.
Additionally, since CIS mortgages give you a much higher borrowing limit, you might have to save for longer to afford the deposit for the amount you need.
Getting a CIS Mortgage with Bad Credit
As with any other type of borrowing, lenders will look at your credit score and history. If you have poor credit, you might have a hard time finding a lender, but it is not impossible. Mortgage advisors such as those from Mortgage Experts Online can help arrange for bad credit mortgages. Mortgage Experts Online assists prospective homeowners in getting the right kind of mortgage, and they also have a guide that will help you understand CIS mortgages better. You can learn more about CIS Mortgages here as well as get the help you need obtaining a mortgage on Mortgage Experts Online’s website.
The Construction Industry Scheme not only helps construction contractors to pay tax on behalf of their subcontractors, but it also gives construction workers a lot of benefits when they need to take a mortgage. It allows for higher amounts as well as better deals since it allows construction workers to present a higher income level.