We specialise in Mortgage Advice for Subcontractors paid via the Construction Industry Scheme (CIS)
While not exactly ‘self-employed’, subcontractors form a middle ground in the working world. Such individuals develop long-term contracts with companies while handling everything from accounting to expenses and taxes themselves. It’s the ideal balance of steady income and freedom for some, but this way of working can quickly become a sticking point when mortgages come into play.
Typically, subcontractor mortgages can be tough due to a general lender reluctance in the face of Construction Industry Schemes (CSI). This method for subcontractor payment is rife, but mortgage lenders often look upon it as irregular and unreliable, throwing the potential for mortgage acceptance into question.
The challenges for subcontractor mortgages don’t stop there, either. Other issues include –
- High deposit amounts (standard 15%)
- Refusal for contracts less than 1 year old
- Expense-based reductions on gross profits
Each of these issues has the potential to stop subcontractors from going down the mortgage route altogether.
How can subcontractors qualify for mortgages?
Subcontractor mortgage approval is largely dependent on stringent requirements. While some lenders will ask for up to three years of accounts, even less strict agreements will require –
- 3-6 months of payslips + bank statements
- Proof of tax deducted at 20%
- Evidence of deposit
How much can subcontractors borrow?
Borrowing amounts for subcontractors remain at the standard 4-5Xs standard income. Worryingly, though, lenders often deduct expenses from income before considering affordability. That means profits will take a hit even from high expenses in one month, leading to reduced borrowing possibilities and impossible repayment amounts.
What deposits do subcontractors face?
Deposits are another pressing concern for subcontractors with CIS payments. In fact, if you’re seeking mortgages from inappropriate lenders, don’t be surprised if you face deposit requirements of as much as 15% every time. That’s substantially higher than the 5% that’s now becoming standard among the rest of the population. While an increased deposit can be a benefit to you, such demands could see you struggling to save that money in the first place.
Help on hand with CIS Mortgage Advice
If nothing else, the potential setbacks mentioned lead many subcontractors to turn to our CIS specific mortgage advisors for a better deal across the board. We pride ourselves in finding the best subcontractor mortgage deals on the market, even if you don’t meet those ‘standards’ outlined above.
We’ve had great success helping subcontractors secure fantastic mortgage offers, despite the fact that many of the people who come to us have –
- Contracts less than 1 year old
- 5% deposits
- High day-rates with low net profits
We can even work with you to guarantee that your expenses don’t feature in profits when it comes to affordability checks. And, we’ll be on hand every step of the way to ensure mortgage agreements in principle and mortgage applications that don’t trip you up just because you’re a subcontractor.
If you’re looking for a subcontractor mortgage today, simply phone us on 0800 030 6705 to arrange a free consultation that helps you towards your dreams at last.