If you’re a contractor working under the Construction Industry Scheme (CIS), you may have heard that getting a mortgage can be challenging. But the truth is, with the right approach, securing a mortgage as a CIS contractor is absolutely achievable. Here, we provide valuable mortgage tips tailored to CIS contractors in the UK, ensuring you’re well-prepared for a smooth mortgage application process.
1. Understand the CIS Contractor Advantage
Being a CIS contractor can actually work in your favour. Unlike traditional self-employed applicants who may need up to three years of accounts, many lenders are willing to assess CIS contractors based on their gross income from payslips, sometimes only requiring the last three to six months. This approach can make it easier to demonstrate higher earnings compared to net profits shown on tax returns.
2. Keep Your Payslips and Financial Records Organised
Your payslips are essential for proving your income to lenders, so keep them well-organised. Many mortgage lenders will require your most recent three to six months’ payslips to calculate your average income. Additionally, having an organised record of your bank statements can strengthen your application, as lenders can see evidence of regular income and good money management.
3. Aim for a Healthy Deposit
While many lenders offer mortgages with a 5% deposit, having a larger deposit of 10-15% can open up better mortgage deals with lower interest rates. A healthy deposit reduces the lender’s risk and shows that you’re a responsible borrower. This is especially helpful for CIS contractors, as some lenders may perceive contract work as higher risk.
4. Improve Your Credit Score
A good credit score is crucial for CIS contractors seeking a mortgage. Regularly checking your credit report and resolving any issues can make a big difference in the mortgage deals available to you. Simple steps, like ensuring bills are paid on time and reducing outstanding debt, can boost your credit rating.
If you’re unsure about your credit score, use tools like Checkmyfile to check it and address any issues early. This proactive approach can help you access a wider range of mortgage options.
5. Choose the Right Lender
Not all mortgage lenders have the same criteria for CIS contractors. Some lenders are more flexible and familiar with the CIS structure, while others may not fully understand it, which could lead to unnecessary rejections. A mortgage broker with experience working with CIS contractors can guide you to the best lenders for your circumstances, saving you time and improving your chances of success.
6. Consider a Specialist Mortgage Broker like GoMortgage
One of the best mortgage tips for CIS contractors is to work with a specialist mortgage broker. An experienced broker knows which lenders are most likely to accept CIS applicants and can help present your income and financial records in the best way possible. We also have access to exclusive deals and help you avoid lenders who may not be contractor-friendly.
7. Prepare for Additional Documentation
As a CIS contractor, you may be asked to provide extra documents to support your mortgage application. This could include tax returns, SA302 forms, and evidence of regular income through bank statements. Gathering these documents in advance can speed up the application process and make a strong impression with lenders.
8. Maintain Stability in Your Finances
Before applying for a mortgage, avoid making any large, unusual financial transactions, such as taking on new credit or moving significant sums between accounts. Lenders look for financial stability, and sudden changes can raise concerns. Keeping your finances steady demonstrates responsible money management and increases lender confidence in your application.
9. Budget for Additional Costs
Beyond the mortgage deposit, consider the other costs associated with buying a home, such as valuation fees, solicitor’s fees, and stamp duty. Planning for these costs in advance can reduce stress and ensure you’re financially prepared. Some mortgage brokers can also advise on these costs and help you budget effectively.
10. Plan Ahead and Be Patient
Securing a mortgage as a CIS contractor may take a little extra time compared to traditional employment scenarios. Start your mortgage planning as early as possible, and be prepared for possible additional questions from lenders. Being patient and working closely with a knowledgeable mortgage broker can make the process smoother and help you achieve the best possible outcome.
Final Thoughts
Getting a mortgage as a CIS contractor is achievable with the right preparation and guidance. By organising your payslips, maintaining good financial habits, and working with a specialist mortgage broker, you can improve your chances of securing a mortgage that meets your needs. Remember, your contractor status doesn’t have to be a barrier to homeownership—many CIS contractors successfully secure mortgages and enjoy the benefits of property ownership.
If you’re a CIS contractor ready to explore your mortgage options, get in touch with us today. Our team is experienced in helping contractors secure competitive mortgage deals tailored to their unique circumstances. Let’s work together to get you onto the property ladder with confidence.
