Subcontractor Mortgages
If you’re paid through the Construction Industry Scheme, standard self-employed mortgage assessment can significantly understate your real earning power. Understanding how CIS income is actually assessed can meaningfully increase how much you’re able to borrow.
What CIS Subcontractor Status Actually Means
If you work in construction as a self-employed subcontractor for a contractor who deducts tax at source, you’re operating under the Construction Industry Scheme. Registered subcontractors have 20% deducted from payments; those who haven’t registered face a higher 30% deduction. Either way, you’re still required to file an annual self-assessment tax return, since these deductions are advance payments toward your eventual tax bill, not a final settlement.
There’s No Separate “Subcontractor Mortgage” Product
It’s worth understanding clearly that this isn’t a distinct mortgage product with its own rates – it’s a standard mortgage, assessed using a different method of calculating your income. The term simply describes lenders using your gross CIS earnings, shown on your payment and deduction statements, rather than treating you as a standard self-employed applicant and relying on filed accounts or net profit after expenses.
Why This Makes a Genuine Difference to How Much You Can Borrow
A standard self-employed assessment looks at your declared net profit after legitimate business expenses and tax planning, which can be considerably lower than what you actually earned before those deductions. A subcontractor earning £50,000 gross over a year might see this reduced to a declared profit in the region of £28,000-£35,000 once expenses and allowances are accounted for – and a lender assessing that lower net figure will offer meaningfully less borrowing than one assessing your genuine gross earnings.
Illustrative Example
Consider a subcontractor earning £46,000 gross over a year through CIS payments, but declaring £28,600 in profit after expenses on their self-assessment. Assessed on the lower declared profit figure at a standard 4x income multiple, borrowing might be limited to around £114,400. Assessed instead on the £46,000 gross CIS figure, the same borrower could access closer to £184,000 – a genuinely substantial difference driven entirely by which income figure the lender uses, not by any change in creditworthiness.
Income Multiples
Lenders offering gross CIS income assessment typically apply a multiple of 4 to 5 times your annual gross earnings, with some willing to stretch to 5 or 6 times for particularly strong applications. It’s worth discussing your specific circumstances with your broker, since this multiple, combined with your deposit and credit history, ultimately determines your realistic borrowing ceiling.
Documentation You’ll Need
Most lenders assessing gross CIS income want to see between three and twelve months of your CIS payslips or payment and deduction statements, most commonly three to six months, used to calculate an average monthly figure that’s then annualised. Corresponding bank statements covering the same period are typically required too, allowing the lender to verify that the income shown on your statements genuinely landed in your account.
Why Registration Status Matters So Much
If you’re registered for CIS specifically, lenders can generally use the gross income route described above. If you’re not registered – facing the higher 30% deduction – you’re more likely to be assessed as a standard self-employed applicant, typically requiring one to three years of accounts or SA302 tax calculations, with affordability based on the lower net profit figure rather than gross earnings. It’s worth understanding which category applies to you before assuming the more favourable gross-income route is automatically available.
New to CIS or Limited Trading History
Given CIS assessment relies on payslips rather than multiple years of accounts, subcontractors with less than the two to three years of trading history a standard self-employed application would typically require can sometimes still access competitive borrowing, provided they have a genuine track record in the construction industry more broadly. It’s worth being upfront with your broker about your specific history, since a strong same-industry background can offset a shorter period specifically on CIS.
Deposit Requirements
Most lenders require a minimum deposit of 5-10%, broadly in line with standard residential lending, though a larger deposit generally improves both your rate and the range of lenders willing to consider your application.
Credit History
A less-than-perfect credit history doesn’t automatically rule out a subcontractor mortgage – specialist lenders exist who will assess CIS applicants with credit issues on a case-by-case basis, though it’s worth being upfront about any concerns from the outset so your broker can identify genuinely suitable lenders rather than risking a decline.
Buy-to-Let for CIS Subcontractors
CIS subcontractors can access buy-to-let mortgages, and for these applications, lenders primarily assess the rental income potential of the investment property rather than your personal income, meaning the gross-versus-net income question is somewhat less central. Your personal income can still matter where a lender applies a minimum income threshold for buy-to-let applicants, commonly around £25,000 a year, so having your CIS income correctly presented remains worthwhile even for an investment purchase. Our Buy-to-Let Mortgages page covers the wider rental income assessment process.
Not Every Lender Offers This Assessment Route
Gross CIS income assessment is a genuinely specialist area, and not every lender offers it – some will still default to treating you as a standard self-employed applicant regardless of your CIS status. This is exactly why working with a broker who understands which lenders genuinely assess gross CIS earnings matters, rather than applying directly and being assessed on a less favourable basis by default.
Working With Your Accountant vs Your Broker
It’s worth understanding that your accountant’s job – minimising your tax liability through legitimate expenses and allowances – can work against you when applying for a mortgage assessed on declared profit, since the lower the declared figure, the lower your standard self-employed borrowing. A broker who understands CIS-specific assessment can help present your genuine gross earning power instead, rather than the tax-efficient figure your accountant has legitimately and correctly prepared for HMRC purposes.
If Your Circumstances Are More Complex
If you also have adverse credit history, or the property you’re considering falls outside standard lending criteria, this doesn’t rule out a mortgage – it simply means identifying lenders genuinely equipped to assess your full circumstances. Our Adverse Credit Mortgages page covers this in more detail.
Frequently Asked Questions
Is a subcontractor mortgage a different product to a standard mortgage?
No – it’s a standard mortgage assessed using your gross CIS income rather than net self-employed profit, which is simply a different, often more favourable, method of calculating your affordability.
How much more can I borrow using gross CIS income compared with standard self-employed assessment?
This varies by individual circumstances, but the difference can be substantial – sometimes 50% or more – since gross earnings before business expenses are typically considerably higher than declared net profit.
How many months of CIS payslips do I need?
Most lenders want three to twelve months, most commonly three to six, used to calculate an average monthly income that’s then annualised.
What if I’m not registered for CIS?
Unregistered subcontractors face a higher tax deduction and are more likely to be assessed as standard self-employed applicants, typically requiring one to three years of accounts rather than payslips.
Can I get a subcontractor mortgage if I’ve only recently started working under CIS?
Potentially yes, particularly with a genuine track record in the construction industry more broadly – worth discussing your specific history with your broker.
Get in touch with details of your CIS payslips and trading history, and we’ll help you find a lender genuinely equipped to assess your gross earning power.
