CIS New Build Mortgage

Is it harder to get a mortgage on a new build property for a CIS worker?

The rules for getting a CIS mortgage on a new build property are exactly the same as for a mortgage on a second-hand property.

What also has to be factored in, because it is a new build, is the amount of deposit. As always, you will need to demonstrate your income, using normally your last three months CIS payslips – but with a new build you may also need a slightly bigger deposit.

Some mortgage lenders, in particular if it’s a flat, would want a 10% or a 15% deposit – or even more in some cases.

It’s less restrictive on a house, and more and more lenders can do that with a 5% deposit, especially since the Help to Buy scheme ended a couple of years ago. So I would say it’s a little bit more difficult if lenders want a higher deposit.

How long does the new build application process take for a CIS worker?

It takes between 10 and 15 working days to approve the mortgage. The lender needs time to inspect the CIS payment and deduction statements, validate the income on the bank statements and do their own enquiries. That’s also the same timescale as buying a secondhand property as well.

Then we have the legal process. As a mortgage advisor, I’m not legally trained, but I’ve experienced the process hundreds of times over the last couple of decades for my clients.

That normally takes anything from four weeks to two or three months.

What are the eligibility criteria for a CIS worker to get a mortgage on a new build property?

If you’re paid through the CIS scheme and you want to buy new build property, first of all, you need to make sure you’ve got a minimum of three months of CIS payment and deduction statements. Make sure you have the 20% deduction and not the 30% deduction – the 20% tax indicates that you’re fully CIS registered. 30% is an emergency tax that applies when you haven’t been fully registered.

You would need to have a minimum of 12 months working in the construction industry. You wouldn’t be able to go from being a butcher four months ago and then straight into working in construction, for example. You need that track history.

How is affordability calculated for a CIS worker on a new build property?

The mortgage lender would normally look at either the last three months or the last 12 months CIS payment and deduction statements.

If they’re looking at the last three months, they’ll take the average and annualise that figure. Of course, if they’re looking at 12 months, that’s already the annual figure.

Then, they have to factor in other things. Quite often new builds have estate charges or service maintenance charges. That’s factored in as a monthly ongoing commitment along with any other financial commitments you may have, such as loans, car finance, credit cards, Klarna and PayPal payments.

Some commitments don’t appear on your credit file – such as looking after children or vulnerable adults. That’s all factored in when a mortgage lender calculates how much you can borrow using your CIS income.

What deposit do I need for a new build property as a CIS worker?

The minimum deposit is 5%. However, that can be impacted if you’re buying a flat. A new build flat will often need a minimum of a 10% deposit, and in some cases, maybe 15%. It just depends on the mortgage lender.

On a new build house, more and more lenders now accept CIS income and a 5% deposit.

There are exceptions to that – it might also depend on your credit profile. If it’s not a great credit profile, a 15% deposit would get you over the line.

How much can I borrow for a new build as a CIS worker?

It’s calculated using the gross income from your CIS payment and deduction statements, and then putting that into the mortgage lender’s calculator.

These calculators are all different from lender to lender, but generally speaking, you can typically borrow between four and 5.5 times your income.

If there’s a second person on the mortgage application, their income is added into the mix as well. You might get less than four times the total if you’ve got lots of financial commitments, or it might be closer to 5.5 times if you’ve got a very strong income with no commitments.