Natwest CIS Mortgage
Natwest CIS Mortgage – What you need to know
What is a CIS Mortgage for Contractors?
Historically, it has always been more challenging for contractors to get a good mortgage deal compared with employed people.
This is largely because contractors are self-employed, which can mean their income varies from month to month. Mortgage lenders tend to see this as risky, and so they have stricter criteria for applicants to meet.
The construction industry is heavily reliant on contractors. Because of this, it has lobbied high street lenders for years to make it easier for contractors to buy a home. Meanwhile, competition in the mortgage sector has encouraged lenders to accept more customers.
As a result, certain lenders now offer mortgage products to contractors who are registered with the Construction Industry Scheme (CIS). The big advantage is that lenders allow construction contractors to declare the gross amount of income on their CIS pay slips. Using this, rather than filed accounts, makes good mortgage deals more accessible.
What is the Construction Industry Scheme?
The Construction Industry Scheme was created by the government as a way to improve tax collection in the construction sector. Any contractor who pays subcontractors has to register with the scheme and deduct tax from the subcontractor’s pay. The scheme can help subcontractors spread their income tax burden across the year rather than pay a substantial bill by doing their tax return.
Subcontractors don’t have to register for the scheme, but if they do they have tax deducted at a rate of 20% on their earnings. Non registered subcontractors are taxed at 30%.
What does a Natwest CIS mortgage involve?
The fact that Natwest offers CIS mortgages is excellent news for those in the construction industry.
If you have applied for a mortgage before as a self employed worker, you’ll know how rigorous the application process can be. If you have less than three years’ accounts or income or net profit below a certain level, it can be tricky to be approved at all.
How do I qualify for a Natwest CIS mortgage?
Natwest’s mortgages for CIS contractors will take your gross income as the basis for its lending calculations. This way, you will be offered a bigger loan than if you were assessed on a self employed basis. You will also get a better mortgage rate.
As part of the application for a Natwest CIS Mortgage you will need to show that you have a contract in place. You will also need to show 12 months’ CIS vouchers or statements.
If you need a mortgage with a loan-to-value of more than 75%, you will also need to show three months’ personal bank account statements.
As with any mortgage or loan, Natwest will check that you have a good credit record. If you have any concerns about your credit scoring, you can check your records via Experian.
Natwest will also provide an Agreement in Principle in advance of the full mortgage application. This can help you when you make an offer on a property – it makes your offer more likely to be accepted.
How much can I borrow with a Natwest CIS mortgage?
Most lenders will give you a mortgage for around four times your income, although some will offer more.
Natwest takes a more individual stance – they will decide how much to lend you by assessing a variety of factors. Aside from income, these include your age, whether you already own a property or not and whether you have any dependents.
As experienced mortgage advisors, we have insight into which lenders are likely to offer you the most based on your personal circumstances. We will also work with you to ensure that your monthly payments are affordable and won’t cause too much financial pressure.
How can CIS Mortgage Advice help?
CIS Mortgage Advice was set up exclusively to help people in the construction sector to buy a home. We explore your individual circumstances to provide expert mortgage advice. We act almost like human mortgage calculators. We give you all the details about how different property costs, deposits and mortgages will impact potential monthly payments.
Our registered office is fully authorised and regulated by the Financial Conduct Authority.