7.4. House Mortgage (How-To)

A house mortgage can be setup using the account structure present in Section 7.2, “Setting Up Accounts”.

As an example, assume you have $60k in you bank account, and you buy a $150k house. The mortgage is charging 6% APR, and has administrative fees (closing costs, etc) of 3%. You decide to put $50k down, and thus will need to borrow $103k, which will give you $100 after the closing costs are paid (3% of $100k).

Your accounts before borrowing the money:

Accounts Before Receiving Loan

Accounts Before Receiving Loan

The purchase of the house is recorded with a split transaction in the Assets:House account, with $50k coming from the bank (IE: your down payment), and $100k coming from the Mortgage. You can place the $3k closing costs in the same split, and we increase the house loan to $103k to include the closing costs as well.

Table 7.1. Buying a House Split Transaction

Assets:Fixed Assets:House$150,000 
Assets:Current Assets:Bank $50,000
Liabilities:Loans:Mortgage Loan $103,000
Expenses:Mortgage Adm Fees$3000 

The split will look like this in the Assets:Fixed Assets:House Account:

Mortgage Split Transaction

Mortgage Split Transaction

Which will give a Chart of Accounts like this:

Mortgage Accounts

Mortgage Account