The Construction industry is a large one that sees plenty of money being made over the course of years by contractors and subcontractors who need a way to provide financing to these individuals in order to complete the project. However, there are different types of construction loan options available to these construction workers including Building & Construction, General Contractor, Independent Contractor, and Contractor Mortgages.

There are two primary types of construction industry scheme mortgages which are CIS Mortgages and Contractor Mortgages. CIS Mortgages are issued against the equity of a company or structure while Contractor Mortgages is issued against personal property. As with other types of Construction loan options, both types have their own advantages and disadvantages. CIS Mortgages are preferred over other types of Construction loan options since they have lower monthly payments, lower interest rates, and less paperwork required.

Another thing to keep in mind when it comes to CIS Mortgages is that there is a limit to how much they can be taken. Typically, you cannot take out more than 20% of your business. However, CIS Mortgages are not all that difficult to qualify for. You just need to have an income that is at least average to qualify for a construction loan. Most individuals are able to qualify for CIS Mortgages regardless of their current income level or credit standing. Many times if you have a business or rental property, then you are in a better position to qualify for a mortgage.

Many contractors and subcontractors prefer to use CIS Mortgages since this method of acquiring funding allow them to secure loans up to 80% less than the actual value of their construction equipment. As a matter of fact, the savings that contractors and subcontractors receive by obtaining a construction loan through this method is greater than the cost of the loan itself! This is because the capital that is saved on interest and monthly payments are applied back to the value of the equipment instead of having to pay for interest on the interest alone. Also, this type of loan is also easier to obtain.

Finally, an Independent contractor or business owner can purchase the CIS Mortgages themselves. In order to get the loan, they will simply apply for an Individual Investor Mortgage. However, if they have a business that is currently involved in construction it may be difficult for them to obtain financing through this method of obtaining funding. It can take a long time for them to obtain a loan from a bank. Therefore, this is not advised for individuals that have a business that will be involved in construction for many years. They also need to make sure that the property that they own has a strong market value and good credit rating before they are granted the loan.

A good rule of thumb is to work with your accountant in order to determine if your business is able to obtain a Construction loan. While a traditional loan may work for your small business, if you have a larger business or a large one then it may not be as viable.

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