To record the purchase of a property using a mortgage in Sage Accounts

Create the new nominal codes

If you already have these nominal codes then please proceed to the following section To record the purchase and costs .

If you're using the default nominal ledger structure we suggest you use the following nominal codes:

1. Click Nominal codes and click New/edit.
2. Complete the Nominal Record as follows:
   
   

   N/C	Enter the nominal code number you want to create, for example, 7903.
   Name	Enter the name of the nominal code, for example, Loan Interest Paid.

3. Click Save and click Close.
   
   If required, to create further nominal codes, repeat this process.

Record the purchase and costs

Example

Your company buys a new property for £/€200,000. This figure also includes a mortgage arrangement fee of £/€500, stamp duty of £/€1500 and a deposit of £/€10,000.

1. Click Nominal codes then click Journal entry.
2. Enter a reference and date and the relevant information for the journal on the Nominal Ledger Journals window, for example:
   
   
   

   N/C	Name	Dept	Details	T/C	Debit	Credit
   0010 or 0011	Freehold Property or leasehold Property	Department	Purchase cost of new property	T2	198,000
   In this example the property is exempt from VAT. It's possible for VAT to be charged on the purchase of a property. For more information about the rules regarding property and option to tax, please refer to HMRC: http://www.hmrc.gov.uk
   7603	Professional Fees	Department	Mortgage arrangement / setup fees	T2	500
   7607	Stamp duty	Department	Stamp duty	T2	1500
   2330	Mortgages	Department	Outstanding mortgage balance after purchase	T2		200,000
   The following entries represent the value of the deposit made and reduces the amount that shows against the Mortgages nominal code.
   2330	Mortgages	Department	Deposit paid from bank	T9	10,000
   1200	Bank Account	Department	Deposit paid from bank	T9		10,000

   
   
   

   This journal records the purchase of the new property, the administration fees and the deposit paid towards the new property.

3. Click Save and click Close.

You've now recorded the purchase figures for your new property, including arrangement fees. When you're ready to post the monthly payments for the mortgage, please refer to the following section.

Post the monthly repayments

1. Click Bank accounts then click Bank payment and enter the relevant information into the Bank Payments window.
   
   For example:

   Bank	Date	Ref	N/C	Details	Net	T/C	Tax
   1200	Date paid	Ref	2330	Mortgage repayment	xxx.xx	T9	0.00
   1200	Date paid	Ref	7903	Loan interest paid	xxx.xx	T9	0.00

2. Click Save and click Close.

The split between the amount of the payment that reduces the outstanding balance and the amount of the payment that's classed as interest will depend on the type of mortgage taken out. To determine the values you should consult your mortgage lender.

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