Mortgage loan with top up

I have a mortgage loan with an initial amount paid out by the bank to the developer. Thereafter, further payouts would be made by the bank to the developer.
What is the best way to track this in Quicken?
I added the additional payouts as an increase in the loan register but quicken still sees the monthly payments as the original amount (in the loan view - but in in the reminder it shows the new amount) even though I changed the total payment to reflect the new monthly amount. Quicken put the difference as Extra principal paid monthly.
Or should I change the original loan amount to include the additional payouts? If I do this, would the interest be calculated correctly (since the new payouts started later).
Thanks!

Best Answer

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    Accepted Answer
    Don't set the loan up as a "Loan", set it up as a Liability ("Debts other than loans") and credit additional draws against the construction loan to that liability.  If you're also making principal and interest payments as the amount of the loan is increasing, with payments changing accordingly, then post the principal portion of the payments to this liability Account, with the balance of the payment posted to some sort of interest expense Category.
    Keep going this way until the construction loan converts into a traditional mortgage.  When it does, set up the traditional mortgage using Quicken's loan wizard with an initial balance equal (presumably) to the balance shown in the liability Account.  As part of the mortgage loan setup Quicken will create a ("one-sided"/"self-referential") opening balance entry.  When you're done setting up the mortgage, edit that open balance entry to a transfer of the closing amount in the liability Account to the mortgage.  That will zero out the construction loan Account at which point you can hide it.

Answers

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    Accepted Answer
    Don't set the loan up as a "Loan", set it up as a Liability ("Debts other than loans") and credit additional draws against the construction loan to that liability.  If you're also making principal and interest payments as the amount of the loan is increasing, with payments changing accordingly, then post the principal portion of the payments to this liability Account, with the balance of the payment posted to some sort of interest expense Category.
    Keep going this way until the construction loan converts into a traditional mortgage.  When it does, set up the traditional mortgage using Quicken's loan wizard with an initial balance equal (presumably) to the balance shown in the liability Account.  As part of the mortgage loan setup Quicken will create a ("one-sided"/"self-referential") opening balance entry.  When you're done setting up the mortgage, edit that open balance entry to a transfer of the closing amount in the liability Account to the mortgage.  That will zero out the construction loan Account at which point you can hide it.
  • XCountry
    XCountry Member ✭✭
    Thanks Tom! I'll give it a go and see if it works for me
Sign In or Register to comment.