Sole Trader Mortgage - Net Profit & drawings

nconte

Hi All,

I hope you can give me some advice?

My parents are looking to downsize their house and although they have a lot of equity in the house, they will still need a small mortgage on the new place.

My father is retired and my mother runs a small coffee shop and is therefore classed as a sole trader.

They have had an initial meeting at the bank to look into their options for mortgages and it seems that they should be able to get one, however, how much they can borrow is dependent on the net profit of the coffee shop accounts.

My question is.... do the banks take drawings into consideration when looking at the net profit figures?

Here are some figures...

Sales: 63,000 p.a
Costs/Expenses: 43,000
Gross Profit: 20,000
Net Profit: 7,000
Drawings: 13,000

Any advice would be much appreciated.

Thanks in advance.

kingstreet

Drawings are added back in to calculate the net profit.

Order an SA302 from HMRC or see box 30 on the SA Online form, self-employed section.