How Much Can I Borrow?
Different lenders will have different calculations when it comes to how much a CIS contractor can borrow. Typically, it will be the average of the last 3 to 6 months gross amount you were paid (before CIS 20% deductions). This figure is then annualised to give the lender an indication of the amount you would expect to earn over the course of a year. You would then be able to borrow around 5 times this figure on a mortgage.
As an example, if your day rate is £100, and you work five days per week, you would have a weekly gross salary of £500. If you are paid weekly, then the calculation would be £500 x 52 weeks = £26,000 salary for mortgage purposes. As 5 times this amount, it might be possible to borrow £130,000. The amount you can borrow on a CIS Contractor Mortgage also be affected by any loans, credit cards or finance arrangements you have in place. A good credit history is also important, but it’s not disastrous if you have minor issues that were registered over 24 months ago. Our contractor mortgage specialists have many success stories in obtaining mortgages from reputable high street banks even when there are small historic credit issues.