Opportunity Mortgages has access to a select spectrum of lenders that provide first-time buyer mortgages to subcontractors paid through the CIS (Construction Industry Scheme).
You could access mortgages with a 5% deposit. If you’re living in local authority rented accommodation, you could use Right to Buy. If you want to buy a shared ownership property, which is part-buy, part-rent, you could do that with CIS income.
If you’re a construction worker paid through the CIS scheme, you will have 20% tax deducted by the people you’re working for, similar to an employed worker.
Lenders with experience in providing mortgages to subcontractors usually treat subcontractors’ income as if they were employed.
That usually means that a lender will calculate the amount a subcontractor can borrow by multiplying their gross income by 4.5.
Sometimes, depending on the circumstances, they can multiply the income by as much as 5 or 6.
Let’s say you’re an electrician earning £200 a day before tax and you work five days a week. Therefore, your gross income is £1,000 before tax.
With a minimum of three months of CIS pay statements, it could be possible to find a mortgage lender.
However, whether you’ve taken breaks from work or not, most mortgage lenders will assume that you have, so they’ll calculate the amount you can borrow on 46 (not 52) weeks.
That would put you on a £46,000 gross usable income for mortgage affordability purposes.
To calculate how much you could borrow, most lenders will multiply your gross income by 4.5, though some will multiply by 5-6, depending on the circumstances.
So, based on a gross annual income of £46,000, it could be possible to borrow £207,000 to buy a property.
Of course, you’ll need to pass your chosen lender’s eligibility criteria to be approved for a mortgage.
We match tradespeople with mortgage lenders they’re a good fit for. We know the lenders that have experience with approving mortgages for professionals paid through the Construction Industry Scheme.
Even with that knowledge, we meticulously check your circumstances against their criteria because it’s our reputation and your ability to buy a home that are on the line.
You’ll need a minimum of three months’ payslips to prove you’ve been paid via the CIS (Construction Industry Scheme). If you only have three months – that’s ok, but you’ll likely need to prove that you were employed beforehand for an additional nine months.
Going to the wrong lender. So many tradespeople go directly to their bank out of loyalty or ease, but it’s the quickest way to miss out on the best deal.
There are approximately 100 mortgage lenders in the UK, and less than 16 have criteria that suit subcontractors.
If you care about your money or the possibility of getting rejected for a mortgage, compare your mortgage options.
If you pick the wrong mortgage lender, they will look at your tax returns and calculate mortgage affordability from your profit after expenses, which will result in a much lower borrowing figure.
Another mistake to avoid is applying for a mortgage with payslips that show a different net figure than your bank statements. Your bank statements and payslips need to show the same figures, and if they don’t, you’ll need to be able to explain to the mortgage lender why.
