How to Get a CIS Mortgage: A Simple Guide for UK Contractors

If you're a construction industry contractor, you may have heard that getting a mortgage can be challenging. In fact, many applications get rejected because lenders don’t fully understand how CIS (Construction Industry Scheme) income works. But here’s the good news: specialist CIS mortgages are designed to make it easier for contractors like you to borrow the amount you need to buy your home.

At Chetwood Lloyd Mortgages, we’re experts in helping construction professionals secure mortgages without the stress. In this guide, we’ll explain everything you need to know to boost your chances of approval and maximise your borrowing potential.

What Is a CIS Mortgage?

A CIS mortgage is designed specifically for self-employed construction workers registered under the Construction Industry Scheme. Unlike standard mortgages, which rely on net profits or tax returns, CIS mortgages assess your income based on the gross amount shown on your CIS payslips. This method often allows you to borrow more than with a traditional mortgage.

Who Can Apply for a CIS Mortgage?

You can apply for a CIS mortgage if you work in the construction industry and receive CIS payslips. Eligible roles include:

• Builders and construction workers
• Demolition and site preparation specialists
• Electrical, plumbing, and heating engineers
• Repairs and maintenance contractors

To qualify, you’ll typically need:

• 3 to 6 months’ worth of CIS payslips
• Bank statements showing CIS payments
• Proof of CIS registration with standard 20% tax deductions

What Documents Do You Need?

Getting your documents in order is crucial to speeding up your application. Here’s what you’ll need:

1. CIS Payslips:
   • Must show your name, pay date, gross and net amounts, employer’s name, and tax deductions.
   • If payslips aren’t available, some lenders accept CIS Payment and Deduction Statements.
2. Proof of CIS Registration:
   • Unique Taxpayer Reference (UTR) number
   • National Insurance number
   • Start date of your self-employment
   • VAT and company registration numbers (if applicable)
3. Bank Statements:
   • 3 to 6 months of recent statements showing CIS payments
   • Your name, address, and account details should be clearly visible
4. Proof of Identity and Address:
   • Passport or driving licence
   • Recent utility bills, council tax statements, or electoral roll registration
5. Additional Documents:
   • Evidence of your deposit (including a gifted deposit form if applicable)
   • Proof of future contracts (if recently self-employed)
   • Employment history and tax year overviews (if requested)

How Much Can You Borrow With a CIS Mortgage?

One of the key benefits of a CIS mortgage is that lenders assess your affordability using your gross income, not your net profit. This can significantly increase your borrowing potential.

For example, if your gross annual CIS income is £50,000, you could borrow up to £225,000 using a 4.5 times income multiplier. By comparison, a standard mortgage based on net profit might only allow you to borrow around £180,000.

Most lenders use an average of your last 3 to 6 months of CIS payslips to calculate your annual income. Typically, you can borrow between 4 to 5 times your gross annual income, depending on your financial circumstances.

How Much Deposit Do You Need?

The size of your deposit affects both the amount you can borrow and the interest rates available. While some lenders offer CIS mortgages with as little as a 5% deposit, most prefer at least 10%. For new-build properties or flats, a larger deposit of 10% to 15% is often required.

Generally, the more you can put down, the better the interest rates you’ll receive. This is because a larger deposit reduces the lender’s risk and improves your loan-to-value (LTV) ratio.

Finding the Right Lender

Not all lenders are familiar with the CIS income structure, which is why choosing the right one is essential. High street banks often require several years of tax returns and may not accept gross income from CIS payslips. In contrast, building societies and specialist lenders are more flexible, sometimes accepting just three months of CIS income as proof of earnings.

Working with a specialist mortgage broker like Chetwood Lloyd Mortgages can make a big difference. We understand the unique income patterns of contractors and have access to lenders who are happy to consider CIS income. Our team can help you find the best mortgage rates and guide you through the application process from start to finish.

Step-by-Step Application Process

1. Initial Assessment: Check your eligibility, review your credit score, and gather your documents.
2. Submit Your Application: Complete the lender’s forms and provide all supporting documents.
3. Credit Check and Income Assessment: The lender will review your credit history and calculate your affordability using your CIS income.
4. Property Valuation: The lender will arrange a valuation to ensure the property meets their lending criteria.
5. Final Decision: The lender completes underwriting, verifies all information, and issues a formal mortgage offer.

Common Reasons for Application Rejections

Understanding why CIS mortgage applications get declined can help you avoid pitfalls:

• Poor Credit History: Late payments, defaults, or CCJs can impact your application.
• Income Verification Issues: Large fluctuations in income may raise concerns.
• High Monthly Expenses: Existing loans and credit commitments can affect affordability.
• Unclear Deposit Source: Make sure you have clear documentation for your deposit funds.
• Property Valuation Shortfalls: A lower-than-expected valuation can reduce the amount you can borrow.

If your application is declined, don’t worry—there are steps you can take to improve your chances next time. Consider boosting your credit score, saving a larger deposit, and seeking professional advice from a specialist broker.

a CIS mortgage might seem complex, but with the right preparation and support, it’s well within reach. By using your gross CIS income to prove affordability, you can often borrow more than with a standard mortgage. Make sure your documents are in order, choose a lender familiar with CIS income, and work with a specialist broker like Chetwood Lloyd Mortgages to maximise your chances of success.

Ready to take the next step? Contact us today.

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