5 years down the line

Nicki_Kernow

Hi Guys

Ok well I dont really know much about anything financial so here I am .

Moved back home to my parents with my daughter , what was just meant to be tops of a year while we got back on our feet has turned into 6years now :rolleyes:

And although I do love it I'm also getting more and more fed up . Have been looking to rent but now Im seriously considering saving for a deposit for my own house

I'm newly self employed and run my own online business and the last 3 months have been great , each month it has grown more.

Mrs_Bumble

Sorry haven't got a crystal ball so who knows what the market will be like in 5 years time, impossible to say. :rolleyes:

So using today market conditions/lender criteria, as you are self employed then with 3 years good accounts and a hefty deposit and no excessive credit committments and definitely no adverse credit history you would be fine!:D

Jacka87

Firstly I do have some concerns, you say your not financial but you have started your own business. I would say the first thing you need to do is actually work out how well it is doing. Somepeople think there business doing ok but then when they take the end of year costs off they are in complete shock!

The second thing is you have stayed with your parents and not started saving for a deposit for 5 years! You now say you are seriouslly considering it! I would say start saving now!!!! No considering!

In terms of what might happen 5 years from now? Well nobody knows but instead of waiting 5 years and getting a 50% deposit why not wait 3 years and with 30% deposit you can make your move. That allows for 25% deposit and a little money for legals and moving in costs etc. With a 75% ltv mortgage your not going to be getting hit with a disasterous rate.

The only thing is we dont knw the future, you dont know where your business will go? How did you calculate that you might have saved 50k? From previous salary? If so how do you know business will match this? On the other hand your business may take off and you could be a millionaire!

As I said nobody knows the future!

Nicki_Kernow

Thanks Mrs Bumble and Jack

g_attrill

Do you have an accountant overlooking your business, this is important to ensure your money is being used properly from a tax perspective (and that you will be paying the correct tax at year-end!)

RufusA

Nicki_Kernow wrote: »

I can comfortably live and pay personal bills from my monthly tax credits so I have no reason to dip into business profits .

As g_attrill suggested, make sure you have an accountant or someone with a good financial knowledge to check your tax situation. Business profits are liable for tax, and the taxman will expect income tax and national insurance at some point if self employed (typically 25p in the pound above £5k).

Also sadly any means tested tax credits i.e. Child Tax Credit will be reduced by 37p in a pound if income is above approx £5k.

So you may end up with less than half your business profits to save!

Rufus.

Jacka87

I am still worried by your business side by the way you have stated your profit as a percentage. My father has been self employed all his life and his father before etc. personally help my dad wih some of the more modern issues with business such as online areas etc but I also work for him part time to help him out now and again. I am aware that he likes to say yes 60% of that was profit by taking stock costs etc off as a percentage. However you need to remember there are overheads such as rates, utilities, accountants fees, tax etc etc the list goes on!!

The figure you are probably working out when you say 70% or whatever is profit is probably your gross profit and this can sometimes look really good but leave you with very little net profit, which is the only number that really matters at the end of the day!

I am only trying to give you something to think about early as opposed to waiting a year or so and then discovering there is no money in he profit jar cos bills that you forgot about pop up. Hopefully your business is running well and will continue to, just do a bit of work to check that you are accounting for all costs, even nasty big ones like tax bills, or VAT bills!

I would also recomend an accountant if your business is continuing to grow as they can save you much more money (and lots of hassle & stress) than there bill!