The Commercial Finance Hub
Thank you for reading this post, don't forget to subscribe!A strong CIS income can put a contractor in a far better position than a standard high street affordability calculation suggests. Yet many subcontractors are still told they need a large deposit, several years of accounts or a permanent contract before they can access commercial or bridging finance. The reality is more practical. Deposit requirements for CIS-based applicants can start from around 20% of the property or project value, provided the lender understands how you’re paid and the application is packaged correctly.
Your deposit matters, but it’s only one part of the decision. A lender will also look at your CIS income, work history, credit profile, existing commitments and the asset itself. Getting the right combination is what helps you move forward without forcing your income into a standard salaried assessment.
How much deposit do CIS contractors need for commercial or bridging finance?
For many CIS-based applicants, a 20% deposit is the typical starting point. On a £400,000 commercial property or bridging project, that means £80,000 down, with borrowing of £320,000. As with residential lending, the number of lenders available and the rates on offer tend to improve as the deposit rises.
A 25% deposit is often a useful turning point, opening up a wider pool of lenders and making applications more straightforward where there are minor credit issues, a shorter trading history or variable contract income. At 30 to 35%, pricing can become more competitive again, since the lender is taking on less risk relative to the asset value.
That doesn’t mean it’s always worth delaying a purchase to reach the next deposit band. If the right opportunity is available now, your income supports the borrowing and the repayments remain comfortable, a 20% deposit route can be the sensible choice. The right decision depends on the cost of waiting, likely movement in asset values and whether keeping cash back for fees, project costs or contingency is more valuable than maximising the deposit.
Deposit sources commercial lenders can accept
The source of your deposit needs to be clear, traceable and acceptable to the lender.
Savings built from CIS earnings. Usually the most straightforward option. Lenders will typically want bank statements showing funds accumulating, alongside CIS payslips and contracts confirming the money came from genuine trading income.
A gifted deposit from family. Common among contractors, particularly for a first commercial purchase. Lenders generally accept gifts from close family, provided the person gifting signs a declaration confirming it’s non-repayable and they’ll have no ownership stake in the asset.
Equity from an existing property or portfolio. Often used to fund a commercial purchase or bridging project, whether through a sale or a remortgage. The key calculation isn’t just the equity on paper. It needs to account for the existing mortgage balance, costs and whether the new borrowing remains affordable overall.
Proceeds from a property sale, inheritance or investment. All generally acceptable, though expect more documentation where funds have recently arrived or passed through several accounts.
Why the deposit isn’t the whole picture
A bigger deposit doesn’t automatically solve an affordability problem. Some lenders assess CIS applicants using net income after deductions, which can understate what an established subcontractor can genuinely support. Specialist lenders, by contrast, often assess income using CIS payslips and bank statements, taking a more realistic view of gross earnings before deductions.
This is why a 25% deposit with the right lender can outperform a 35% deposit sent to a lender that doesn’t understand CIS income. Deposit size affects loan-to-value and pricing. Income assessment determines whether you can borrow enough for the asset you want.
Choosing between a 20%, 25% and 30% deposit
The cheapest rate isn’t always the cheapest overall deal. A lower-deposit product may carry a higher rate but let you move sooner and keep a healthy cash reserve. A larger deposit may reduce your rate, but not if it leaves you short when a project runs over budget or there’s a gap between contracts.
Look at the full monthly cost, arrangement fees, term and any exit charges, not just the headline rate.
Preparing your deposit before you apply
Before approaching a lender, gather recent bank statements for every account holding deposit funds, your CIS payslips, proof of current and previous contracts and evidence for any gifted or inherited funds. Avoid taking on new credit or using undisclosed borrowing to top up a deposit. Lenders check for this, and last-minute surprises can delay or derail an offer.
At The Commercial Finance Hub, we match CIS-based applicants with lenders that assess contractor income properly, then package the deposit and income evidence clearly from the start, helping deliver more suitable borrowing options and a faster route from enquiry to approval.
