First time buyer CIS mortgages

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). 

What are the main benefits of being a CIS worker if you’re a first-time buyer looking for a mortgage?

1. You can borrow more* because your affordability is based on your gross income, not your profit after tax.
2. You don’t have to have two years of books, which most mortgage lenders would need if you are self-employed.
3. You could access the same products from high street banks and the same interest rates.

What are my mortgage options if I’m signed up to the CIS scheme and I’m a first-time buyer?

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.

How much can a subcontractor borrow on a mortgage if they’re paid through CIS and they’re a first-time buyer?

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. 

Mortgage example for a first-time buyer paid through CIS

Let’s say you are an electrician earning £200 pounds a day before tax and you normally work five days a week. That’s £1,000 before tax – that’s your gross. If you do that consistently over three months and we present it to a lender, they assume that you’re not going to work 52 weeks without a break.

A good scenario is £1,000 for 48 weeks of the year, including a few weeks off. That would put you on a £48,000 gross usable income for mortgage affordability purposes. If I multiply that by 4.5, about £215,000 would be affordable for a property.

What eligibility criteria do I need to meet as a First Time Buyer, CIS worker?

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. 

Mistakes to avoid when applying for a mortgage as a First Time Buyer and CIS worker?

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 invariably yield 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.