Using a Mortgage Calculator | CIS Mortgage Advice
How do you calculate what a CIS subcontractor can borrow?
The way mortgage affordability is calculated for CIS mortgages is very different to the traditional approach for a self-employed mortgage. Most banks typically work out mortgage affordability based on the profit detailed on your self-assessment form.
The problem with assessing profit is that it’s usually a much lower figure than your overall income after tax and expenses.
Fortunately, a handful of mortgage lenders are subcontractor-friendly. They calculate mortgage affordability not from profits, but from your gross CIS income.
What does that mean in practice?
So if you’re an electrician, earning £200 a day, five days a week, you’re earning £1000 a week before tax. With a CIS friendly mortgage lender, this is what they’ll based your income on.
Say you work 48 weeks a year, that’s a total income of £48,000. The lender might offer you a mortgage at four times this figure: £192,000. This is a lot more than you could potentially borrow with the standard self employed route. Using our mortgage calculator [LINK] will give you a figure based on your own earnings.
What else will affect how much I can borrow?
It’s important to note that you will need to evidence your income with CIS payslips, to prove your income to the lender.
They will also take a look at your credit file too, as bad credit can affect the size of your loan or the rates you’re offered. It’s worth checking your credit record before you start considering mortgages, in case it shows anything unexpected.
So once I’ve used the mortgage calculator can I view some properties?
There’s no harm in starting to look at some properties, but it will give you more confidence if you’ve had an indication of whether you’ll be approved for a CIS mortgage.
At CIS Mortgage Advice we’ll look at all the possible lenders and work to get you an Agreement in Principle. It’s normally a fast, online process and will give you a decision about the size of mortgage you could get.
It’s not a guaranteed mortgage, but an indication. The lender will still need to look at your documents and details before approving a mortgage, but it gives you the reassurance to potentially make an offer.
Can I just go to a bank for a mortgage?
There’s nothing stopping you from going to a bank and asking for a mortgage, but as a CIS subcontractor the chances are that you won’t be offered the most competitive deal, or as high a loan as you might hope for.
Equally, a comparison website won’t accommodate the specifics of your kind of work, and may not give you realistic quotes.
Here at CIS Mortgage Advice we specialise in mortgages for construction subcontractors. Not only do we know all of the mortgage lenders in the marketplace who will accept your gross CIS income, we know each lender’s unique quirks.
Some will accept subcontractors running a limited company, for example, while some won’t. Being registered for VAT is a positive for some lenders, while others are more open to customers with blips on their credit record.
What’s the best way to get a good CIS mortgage?
You could start by using the mortgage calculator to get a guide on what you could borrow. Then just get in touch.
We’ll ask you lots of questions to understand your goals, your income, your outgoings and your property plans. By understanding you and your priorities we can research the mortgage market and pull together the best offers to suit you. And because we specialise in CIS mortgages we understand your work, its challenges and how to find the most affordable loans. We make CIS mortgages easy and hassle free.