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Money

How to Do the Most Complicated Money Stuff You'll Ever Have to Do

Here's how to go about applying for a loan, doing a tax return and getting a mortgage without having a meltdown.
November 7, 2016, 12:05am

Illustrations by James Burgess

How to apply for a mortgage

1. First of all work out how much you need to borrow and whether you have enough money to cover all the costs and fees on top. Calculate how much you can afford to borrow online with an online calculator.

2. Don't change jobs up to six months before you apply for a mortgage as lenders like to see that you're in stable employment. Think about paying down any large debts that you have, to demonstrate that you can manage your money.

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3. Save as much money as you can. The more money you can save towards a deposit, the better choice of mortgages available to you.

4. Work out what kind of mortgage you want, whether you want it to be fixed or variable rate, and who you want to be your mortgage provider. Shop around online or use a mortgage broker to find the best provider to suit your needs. They won't charge a fee unless you go with the mortgage they recommend and they can give you a better picture of the whole market, because they aren't being paid by a bank or a lender.

5. Make sure you consider the full cost of each option including interest, fees and payments over the full term of the loan. Interest rates are at an historic low, but that can change quickly.

6. Finally, you will need to prepare some documents to support your application. This will include evidence of your income and your ability to repay the loan, your outgoings and proof of identity.

How to file a tax return

1. Working for yourself might look like more fun but it means you have to file your taxes with Revenue and Customs each to check you are paying enough tax and national insurance on your income. The first step is to register as self-employed with HMRC. You can do this until the 5th of October after the end of the tax year you are filing the return for (the tax year runs from April 6th one year to April 5th the next).

2. Unless you want a fine, you need to file online by January 31st after the end of the tax year. For paper returns the deadline is October 31st after the end of the tax year.

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3. Next, be meticulous. You need a list of all your business income and outgoings for the tax year. This includes invoices, pay slips, receipts for purchases, mileage, bank statements and P60s if you are employed. Keep aside 20% of any taxable earnings as you are paid, otherwise you'll get a shock when the money is due.

4. On the HMRC website, you'll be asked what kind of business you're filing for to tailor the return to your needs. You will then be asked to enter information on all that income and outgoings, which is why it pays to be organised. This is used to calculate how much tax and national insurance you owe.

5. Then you actually have to pay the money owed for the previous tax year by January 31st. A second payment, for the current tax year, is due by July 31st. More information is available on the Money Advice Service website and at HMRC.

How to apply for a loan

1. Personal loans can be useful if you need to borrow some money and you have the money available to meet monthly repayments (like a salary). They often have higher interest than other types of borrowing, so it's important to consider carefully how you are going to pay the money back. How much you can borrow depends on how much the loan company thinks you can repay, but it could be anything between a few hundred pounds and £25,000, with a payback term between one and seven years.

2. If you're taking out a loan to cover the cost of bills, then you should seek free debt advice with a provider like the Money Advice Service before getting into even more debt.

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3. Then rinse the power of the internet to work out which loan provider is best for you. Look at interest rates and fees over the full term of repayment. To get a loan with a bank you have to be over 18, a UK resident and have a current account with the lender.

4. Once you've selected a lender you will have to fill in forms about your personal finances so that they can check your credit score and whether you can afford to repay the money. You may need to improve your credit score, for example by owning a credit card, before you can get a loan.

5. If you have made a mistake, all is not lost. After you have signed the agreement you have 14 days to cancel it, this is called the cooling off period. If you cancel, you have 30 days to repay the loan and any interest. More advice is available at the Money Advice Service website.

@hazelsheffield

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Aviva.

Read more from Aviva Selects the VICE Guide to Finance 2016 here