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if you're thinking about starting a business in the uk there is one big thing that no one warns you about now i remember when i was starting my business this was probably 15 years ago when i started my first business i watched all of the videos on youtube i read all of the guides and did all of the research i felt necessary to get a good understanding of what was required to start a business to run a business and hopefully succeed in business as well and i'm sure you guys in this process are doing exactly the same thing but one thing that i didn't come across until it was too late is the topic of this video and that's what we're going to be diving into and i wanted to share it with you guys because it caused me a real problem when i started my first business and i don't see anyone mentioning this even now kind of 15 years later no one is talking about this but it's a major major problem and anyone that is self-employed will know exactly what i'm talking about when i get to it but it's still important i share it recap what's going on with me why it's a problem in the first place what you guys can do about it and try and ensure that you guys don't get stuck in the same situation that i did so what i want to do first is take you to the nationwide mortgage application proofs guide now what on earth has this got to do with starting a business and why should you care about mortgage if you're starting a business well if you already own a home and you have a mortgage when it comes to remortgaging you're going to have serious problems if you're self-employed if you haven't planned for it and if you don't own a house yet and aspire to own a house but you're also planning to start your business if they are close together i.e at least not two or three years later it's going to be a problem as well and i'm going to explain that a bit more detail as we go through this and before i get into this too much further i just want to say as a self-employed person get used to kind of being discriminated against for being self-employed from mortgage lenders because as soon as you say you're self-employed their criteria changes massively so if someone's employed and they want to get a mortgage they'll go to the mortgage lender and they'll give them all of the usual details and then to back up their proof of income the mortgage lender will say to them we want pay slips usually they'll ask for three months pay slips and this table shows what nationwide will ask for so for example if you get paid monthly they're going to ask you for free pay slips if they get paid every two weeks they're going to ask you for six places so again three months worth or if you get paid every week eight pay slips so only two months worth so that doesn't seem too bad but if we go back up what happens if you're self-employed you need to have been self-employed in the uk for at least the last two years so all of a sudden we go from needing three months proof of income to two years proof of income and to be fair nationwide are one of the slightly better ones a number of the big lenders actually want three years so two years isn't actually too bad so we'll need to see your latest two years of hmrc documents commercial software calculations or tax computation reports now i've just taken out a mortgage with nationwide i've taken out a 10-year mortgage as i hate jumping through these hoops every few years based on how my business is doing at the time or how it has performed over the past three years you know you might have had the most profitable year ever but if the two years before that they weren't great they're going to take the average figure and it can really pull things down so that's why i've taken out a long 10 year mortgage with these guys and like say nationwide aren't too bad and for me they just asked me for two years of sa 302 forms but i'm going to show you later on in the video and also two years of tax overviews which are really easy to get as well so nationwide in fairness despite the fact that i disagree with how much proof they want from a self-employed person i don't think they're too bad when you compare them to some of the other lenders the other thing that makes this completely crazy as well is that obviously i run a limited company if i have employees and they want to get a mortgage they'll just need three months payslips yet me with my business i'll need with these guys two years two years proof of my self-employed income or three years with some other lenders yeah say my business stops performing or isn't performing as well as i hoped who's going to be the first people to go the employees not me so it is a crazy situation that we are in and just to give you some more examples so that was nationwide up next we've got halifax let me just zoom in and see what we've got here so self-employed mortgage criteria they want the usual proof of id two years evidence of regular income and account statements essay 302 forms or a tax year overview for the past three years so they want sa 302s for the past three years so this is why you've got to be careful if you're in a good job at the moment or your income is enough at the moment to remortgage you may be better off remortgaging with your employed income before going fully self-employed as trying to get a mortgage within within the first year it's not in this is pretty close to impossible to get a mortgage in the first year or getting it within the first two years becomes quite difficult but once you get past that two-year mark it does get a lot easier but within the first two years you will probably have to go to a specialist broker who will go to specialist lenders and you'll have to pay a high interest rate on that mortgage to secure it so always keep in mind when you're starting a business whether it's a limited company or a sole trader or a contractor when it comes to getting a mortgage they're going to want at least two years of proof of income and just one final example here we have santander so if you are employed let me again just blow this up so you guys can see we need to see your last three months pay slips oh that doesn't sound too bad does it what about if you're self-employed though if you're self-employed we need evidence to support your mortgage application so we need either this accountant certificate pdf which i'm going to show you in a moment filled out by an accountant or a self-assessment essay 302 plus tax overviews for the same period so i believe santander went three years as well and when you go through to their pdf it shows you the form they want you to fill out i don't know if i can zoom into this as well let me just scroll over so you guys can see it so you can see here they want the uh the last three years as well of all of the details and they want your accountant to fill this out so all of the lenders have slightly different criteria as to what you need to provide than to give you a chance of getting a mortgage but like i say if it's within the first two years of being self-employed you're probably going to have to go to a broker who is used to working with self-employed applicants and they can find you a specialist lender so why is this actually the case you know because this wasn't always an issue and the cause is the global financial crisis so what happened in 2007 and 2008 and this article here talks you through what happens before the financial crisis of 2007 8 people who couldn't prove their income for a mortgage application often turned to a controversial form of borrowing called self-certification mortgages more than a decade on these products have disappeared from the uk market so what happened is people that were self-employed would fill out a form to tell them how much they earn but i didn't actually have to back that up and that was part of the thing that contributed towards the global financial crisis um but i'm not going to blame self-employed people for causing the gfc this is primarily in the hands of the bank this is what happened they shouldn't have been lending in the first place so self-certified mortgages were products aimed at people who are unable to provide proof of their regular income in the uk they were popular with self-employed professions including freelancers contractors company directors and other people with non-standard income they were often the only way people in this category could get approved for a mortgage with self-served mortgages no formal proof of income was required and most applicants are almost guaranteed acceptance so they were a great way of getting a mortgage if you were self-employed 15 years ago but now because of what happened they introduced some regulation and now they're overly cautious i think you know to ask someone for two to three years proof of income when you're only asking employees to provide three months worth of pay slips i think that's a bit unfair um but i wanted to share with you guys i wanted to make sure you were aware of it so depending on your situation you can do the relevant planning or make the relevant decisions now or later to ensure you don't get in the situation that i did i bought a house in 2007 at the peak i then went self-employed and then when that mortgage was up two years later i didn't have enough business history to be able to get a new mortgage so basically i had to go on to the bank's standard variable rate which meant i was effectively a mortgage prisoner so i had to wait until my employment history or my self-employment history caught up enough to get myself onto a new deal so that's why i felt it was important to share that with you guys and if you do go through this process like i showed you on the criteria pages often the lenders will ask you for your sa 302 forms and the tax year overviews so the easiest way to access these is to go to your hmrc or the gov.uk account go to the self-assessment section here and providing you've already done at least one self-assessment you have this link here which is view and manage your self-assessment tax return so click on that and then scroll down and you'll see a link here which says get your essay 302 tax calculation and if you click the arrow next to this link here it will show you your previous years as well so i can download this year's essay 302 and the previous years so you can click on those i'm not going to do that because i'm going to have to blur out all of my figures and to see the taxi overviews just click the tax year overview link as well and print those out or save them as a pdf and you should be able to send them to your lender and hopefully they'll accept them so hopefully you guys have found this video useful if you did i'd appreciate it hit the like button and subscribe to the channel and what i'm going to do now is pop up two videos the first one is going to show you exactly how to pay yourself the most tax efficient way to pay yourself from a limited company and the second one is going to talk about all of the allowable business expenses that you can use to save as much tax as possible with your business and i'll see you guys in the next video [Music] you