Adding loans and other debts
A liability represents the outstanding principal, not the value of the financed property. It is subtracted from gross wealth to obtain net wealth and can provide a monthly payment for the budget.
Recording a loan
- If the loan finances property, first create the holding support and corresponding asset.
- Select New liability in the action bar.
- Choose the appropriate type, such as a mortgage or personal loan.
- Enter a name or lender, the outstanding principal, its currency, dates, and known rate.
- Enter the monthly payment used for projections.
- Select the support that holds this debt, or None if you do not use one.
- For a mortgage, use Associated assets to select the financed property or properties, then choose Apply.
Example: for an apartment worth EUR 250,000 with EUR 140,000 left to repay, the asset carries the value of EUR 250,000 and the liability carries the outstanding principal of EUR 140,000. The net wealth associated with this group is therefore EUR 110,000 before other items.
Distinguishing the support from associated assets
These two pieces of information answer different questions:
- the support indicates how the debt is held; owners and their shares are defined on this support, not directly on the liability;
- associated assets, available for a mortgage, indicate what the loan finances, such as an apartment or several properties.
For financed property, the asset and liability can be linked to the same support to maintain consistent ownership, and the property can then be selected under Associated assets. The loan nevertheless remains a separate item: changing the outstanding principal changes neither the property's value nor its rent.
Effect on views
- Situation distinguishes gross wealth from net wealth.
- Passive income can include repayments to display net income.
- Analyses presents debt and its allocation.
- Budget can use a loan payment as a recurring expense.
Adding the monthly payment to the budget
- Open Budget and the add menu for the account that pays the loan.
- Choose Add a liability expense.
- Select the loan.
- Check the amount, frequency, and next occurrence before saving.
The budget line uses the expense in the budgeted account's currency. If the loan and account use different currencies, an exchange rate is required.
After a repayment, update the outstanding principal rather than the property's initial value. When the loan has ended, enter an outstanding principal of zero or its end date; delete it only if you no longer want to see it in the current document.