Can you get a Mortgage as a CIS Worker

By James Evans, Director, TouchPoint Mortgages.

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Can you get a Mortgage as a CIS Worker? Navigating the mortgage process can be particularly daunting for workers within the Construction Industry Scheme (CIS). Unlike traditional employment, CIS workers face unique challenges when proving their income due to the nature of their contract work. However, with proper preparation and understanding of what lenders look for, securing a mortgage as a CIS worker is entirely achievable. This blog outlines the steps CIS workers can take to enhance their mortgage approval chances, highlighting how lenders assess affordability and what documentation is necessary.

Understanding CIS

Firstly, it’s crucial to understand that being under the Construction Industry Scheme (CIS) means lenders will view you differently than if you were in standard employment or even self-employed. CIS workers are considered a unique category because their tax status resembles that of an employee, yet they have the flexibility and sometimes the unpredictability of self-employed income.

How Lenders Assess Affordability

When it comes to securing a mortgage, one of the main hurdles CIS workers face is proving their income. However, many lenders are familiar with the CIS and have tailored their affordability assessments to suit:

     

      • Day Rate Assessment: Lenders often calculate your annual income based on your day rate. This is usually multiplied by a certain number of weeks (46 or 48) to account for the seasonality of construction work and potential unpaid leave. This method can be more favorable for CIS workers, as it might reflect a higher income than what a traditional self-employed net profit calculation would show.

      • Requirement for Wage Slips: Typically, lenders will request the latest 13 weeks of wage slips as evidence of your income. These slips help lenders understand your current earnings and assess your loan affordability.

    Steps to Increase Your Mortgage Approval Chances

    1. Keep Your Documents in Order

    Maintain a clear and organized record of all your financial documents, including wage slips, tax returns, and any other proof of income. Having these documents readily available will make the application process smoother.

    2. Save for a Larger Deposit

    The larger your deposit, the less risk you pose to lenders, which can improve your chances of approval. Additionally, a larger deposit can secure you a better interest rate, reducing your monthly repayments.

    3. Check Your Credit Score

    Your credit score plays a vital role in your mortgage application. Ensure your credit history is in good shape by paying bills on time, reducing outstanding debts, and correcting any errors on your credit report.

    4. Use a Mortgage Broker

    A mortgage broker experienced in dealing with CIS workers can be invaluable. They can provide advice tailored to your situation, help you find lenders with favourable terms for CIS workers, and assist you throughout the application process.

    5. Consider a Joint Application

    If possible, applying with a partner or a close family member can increase your affordability, as lenders will consider both applicants’ incomes. This can also help you qualify for a larger loan.

    6. Be Realistic and Flexible

    Understand what you can realistically afford and be flexible in your property search. Being open to different types of properties or locations can increase your chances of finding a home within your budget.

    7. Prepare for a Higher Interest Rate

    Due to the perceived risk associated with fluctuating incomes, CIS workers might face slightly higher interest rates. Budgeting for this can prevent any financial strain in the future.

    Getting a CIS mortgage with bad credit

    f you have suffered a period of poor credit, whether that is from a previous IVA or bankruptcy, or simply some missed payments or even a CCJ, then we can help you here at TouchPoint Mortgages. We have a dedicated bad credit team who can work with you to find a lender to suit – one who is experienced in CIS and bad credit for a perfect match.

    We have lots of advice for buyers looking to get a mortgage with a poor credit history. Look to some of our other articles on the topic or call us today for dedicated advice.

    How to apply for a CIS mortgage

    We work with a wide range of mortgage lenders across the UK and will help you find a provider and product to best match your personal circumstances.

    Lenders will be looking for at least 12 months of history before considering you for a mortgage, so keep on to your CIS payslips and bank statements!

    We provide a pre-evaluation ahead of helping you make a formal application with a lender, and can help you get the all important decision-in-principle, often within a few days.

    Conclusion

    Securing a mortgage as a CIS worker requires thorough preparation and an understanding of how lenders view your income. By organising your financial documents, improving your credit score, saving for a substantial deposit, and possibly enlisting the help of a mortgage broker, you can significantly enhance your chances of mortgage approval. Remember, the unique way lenders assess CIS workers’ affordability can often work in your favour, highlighting the importance of presenting your financial situation accurately and effectively.

    If you want more information on CIS Mortgages , then please get in touch with a member of our team now