We find that some clients have trouble to borrow the mortgage they need because they don’t have three years worth accounts? Written off costs and declare a low net profit? With Construction Industry Scheme (CIS) mortgages, you can use the overall income on your pay slips rather than your business accounts.
To get considered for the CIS scheme mortgages you need the following:
At Least 12 months CIS worth of pay slips, the Tax on the CIS Mortgage must be taken at 20%. We also find that a minimum of 15% deposit is required.
The self-employed might find it hard to obtain CIS mortgages, mostly because many sole traders will write off costs against the income allowing them to pay less in tax. Lenders usually calculate affordability based on net profit figures, reducing the net profit on accounts can cause problems when it’s time to provide evidence what you can afford to borrow.
The good news is that tradesman and anyone paid through CIS where tax is deducted at 20%, can use the total income figures on their CIS pay slips so long as they have had 12 months history.
How much can you borrow on this type of mortgage?
Typical lending figures are then approximately four times this number, but can be lower if you have other ongoing commitments such as other mortgages, loans and credit cards. Assuming this borrower earned £5000 every month, the total income would be £5000 x 12 = £60,000. Without any other outgoings, this person would be able to borrow approx. £240,000.
CIS mortgages with bad credit
If you have a history bad credit, there are still lenders that will consider your application. In fact, so long as you have had no defaults or County Court Judgements in the last 2 years, you can still be accepted at top rates.