Mortgages for CIS workers

Since 2004, Freelancer Financials has helped thousands of self-employed CIS subcontractors buy their first home. If you’re a contractor in the construction industry whose employer deducts 20% tax from your income, you’re in the CIS scheme. That means we can help you, too.

It doesn’t matter what your job is; our lenders treat your self-employed income the same way:

Bricklayer	Carpenter	Decorator	Demolition
Electrician	Plasterer	Plumber	Site Prep

If you’ve got a decent credit history and have notched up three consecutive monthly payments, our lenders want to help!

Who we’ve helped

As a specialist CIS contractor mortgage broker, we understand that every subcontractor’s situation is unique. To that end, we’ve assisted self-employed CIS clients, even with the following circumstances, who have:

• been self-employed for less than 12 months;
• only a 5% deposit to put down;
• been in the UK for at least one year;
• yet to complete their first SA302 self assessment;
• even had the odd misstep in their credit history.

CIS Mortgage Specialist

You might think it’s because you’re specifically a Construction Industry Scheme (CIS) subcontractor that’s making it hard for you to get a mortgage. It’s not. High Street lenders tend to struggle with all types of fixed-term contractors.

That’s because conventional mortgage providers and High Street lenders can’t get to grips with how you work and get paid. This can cause bigger problems than just mortgage rejection.

It’s easier for them to assess your mortgage affordability as if you were a self-employed sole trader. To do that, they demand at least 2-3 years’ accounts and tax returns for the basis of their calculations.

This method will often fail because accounts and tax returns rarely reflect your true mortgage affordability. Don’t panic; there is a better way.

100% independent broker = every type of mortgage from every lender

Freelancer Financials specialises in mortgage services for CIS subcontractors. We offer the full complement:

• remortgages,
• homemover,
• first-time buyer,
• and even buy-to-let mortgages.

No matter which type you’re looking for, we can use your contract day rate as the basis of our affordability calculation.

Our extensive experience in the field ensures you get treated as fairly as your permie peers. Plus, we’re a truly independent broker. That means we can give you access to the most competitive and appropriate contractor mortgages in the UK.

Simplicity: how we help CIS Workers

When you open discussions with us, we’ll assign you an experienced broker and a support admin. They’ll handle your application from start to finish. It’s their intention to make the mortgage process as hassle-free as possible for you.

You’ll have to provide us with certain information upfront (but no accounts or tax returns!). We need this information to be able to complete our Fact Find. After that, we’ll do all the heavy lifting for you. The documents we need include:

• between three- and six months’ payslips, depending on the lender;
• your personal CIS scheme registration info, confirming your 20% tax deductions;
• confirmation of your readily available deposit (5% of house purchase price minimum).

With those, we can get your Decision in Principle in the first instance. Thereafter, we can give you a firm guide to what you can borrow. It will then be down to us to liaise underwriters and keep you up-to-date with your mortgage process.

How much can you borrow?

We can only give you an exact figure once we’ve taken the basic information from you. But, as a rule of thumb, there are two scenarios.

The first scenario is if you don’t use a specialist broker and, instead, approach a mortgage lender direct. The second is for us to present your true mortgage affordability in a way that a lender’s specialist underwriting team will understand. Let’s walk through both scenarios:

1. Approaching a mainstream lender direct

In striving to make you as tax-efficient as possible, your accountant will streamline your income. This means that, if you’re set up as a sole trader, all your expenses will be noted down and deducted.

For CIS workers who elect to operate through a ltd company, accountants will advise them to draw down their income as salary and dividends.

Whilst these structures are great for tax planning, they diminish your profit for affordability purposes.

We get it: if you operate through your own ltd company, you leave your profit in your company to shelter it from higher rate tax. But it also means the typical self-employed mortgage affordability calculations fail because they can’t factor in that profit.

If we know contractors, that means the bulk of their income is off the table. This will result in a low offer from the lender (or a straight rejection), leaving you deflated, dejected and even angry. But there’s a better way:

2. Using a specialist broker to help interpret your contract income

Just as no two lenders’ mortgage criteria are the same, no two brokers are the same, either. So, for this part of the process, we’re talking only about what Freelancer Financials can offer. You may find calculations differ at other brokers, especially if they don’t specialise in contractor mortgage applications.

Our specialist advisors use your day rate as the basis of your mortgage affordability calculation. This bypasses the need for accounts and SA302s. Plus, it has the potential to significantly raise your borrowing ceiling. By using specialist underwriters, we can make the most of your best asset: your contract rate.

Your underwriter will then look at your last 3-6 months' payslips, for two reasons:

1. to check that what you earn matches what your contract says you earn;
2. to get your average income, which they can then ‘annualise’.

Assuming everything pans out, let’s look at a quick example:

CIS contractor borrowing potential: an example

Let’s say you earn £220/day, and your contract and payslips back that up. We would then annualise that day rate, based on you working five days per week, 46 weeks a year. Some lenders will use 48 weeks in this part of the calculation, but let’s err on the side of caution.

So, £220 x 5 = £1,100 per week. Annualised, that means: £1,100 x 46 weeks = £50,600 salary equivalent.

The last step is to factor in the lender’s affordability vector. This can range from 4.5 to 5.5, depending on several factors, including:

• your credit rating,
• the lender’s policy, and
• your unique situation.

Again, erring on the side of caution, let’s use 4.5 for this example.

So, the final step: use your £50,600 ‘annualised’ salary x 4.5 = £227,700.

That means, if you earn £220/day, you can borrow up to £227,700 for a mortgage. That figure has the potential to increase if your profile scores highly against an individual lender’s criteria.

Lock in your remortgage rate up to 6 months before your current deal expires

Our service doesn’t only cover homebuyers or home movers. We can help CIS contractors to remortgage, too.

Knowing what you’ll be repaying each month in advance for your mortgage is key to managing your household budget. If your fixed introductory term is due to expire, we’ll help you gain the foresight you need to balance the household books.

Freelancer Financials’ remortgage service helps you lock in a new interest rate up to six months before you fall onto your lender’s SVR. You should avoid that at all costs!

Standard Variable Rates are often much higher than you’d have been paying during your introductory term. That means you must ensure that, before your current introductory rate expires, you’re locked into a new deal.

Our interest rate monitoring service can help you do that. That’s because once you’ve locked in your deal, you’re guaranteed that’s the most you’ll pay when your current deal expires. But, if interest rates drop, we automatically switch you to that lower rate. Win-Win!

Conversely, if the interest rate goes up, it doesn’t matter: you’re covered. You’ll only ever pay the rate applicable on the date you locked it in.

CIS workers with less than 12 months' contracting history

If you think you have to wait a full year before applying for a CIS contractor mortgage, think again. If you’ve worked in the same industry continually for at least 12 months, we can help.

On the High Street, mainstream lenders might tell you to wait until you’ve got 12 months’ CIS payslips behind you before applying. We won’t.  We can get ‘Day 1’ CIS mortgages, providing your CV shows the relevant work history.

This is a game-changer for CIS subcontractors. Your home can now match your earning status without the usual delays.

Helping CIS workers with a less-than-perfect credit history

We can even secure mortgages for CIS contractors with a less-than-perfect credit score. If you’ve got a small CCJ or payment default registered against you more than two years ago, we can still help.

Our mortgage experts have, over the years, devised a template that will help understand your circumstances then, and how they’ve changed now. This way, you can explain the scenario for each negative point on your file. Our advisors should then be able to build a case to support your mortgage application.

It’s no use trying to bury anything under the carpet. Lenders are much more tuned in today. They will have a copy of your credit report.

It’s imperative you get one, too. If there’s something unexpected there, even if it’s something minor, or something you can challenge, it’s best you do it before the application process.

But, don’t worry if you don’t know how. As long as you’re candid with the facts, our advisors can mount a challenge for your mortgage, based on your day rate.

There’s no time like the present

It can be difficult to get a mortgage as a CIS contractor. But it needn’t be!

Whether you’re ready to buy now or are just planning ahead for the future, call us or send us your enquiry. One of our experienced CIS mortgage advisors will call you right back to get the conversation started.

Regardless of your circumstances, there’s every chance we can help. All of our mortgage advisers are both experienced and qualified. Trust them to help you build the foundation for your future.