How mortgage and loan transactions work
A mortgage or loan can appear in two accounts:
- Bank account: Records money paid to or received from the lender.
- Liability account: Records the amount owed and, where transaction tracking is enabled, repayments, advances, interest, and other charges.
These records describe different sides of the same financing activity. Worthic can link them and use the appropriate reporting source so the same payment is not counted twice.
Financing controls are available for relevant transactions assigned to Personal, Business, or Real Estate reporting lines.
Choose the appropriate category
Select the category that describes the movement:
| Transaction | Category |
|---|---|
| Regular mortgage or loan payment from a bank account | Mortgage and loan payments |
| Corresponding repayment in a liability ledger | Mortgage and loan repayments |
| An additional payment toward the loan | Mortgage and loan extra payments |
| Loan proceeds or an additional amount borrowed | Mortgage and loan grants |
| Interest recorded in the liability ledger | Mortgage and loan interest |
| Loan fees recorded in the liability ledger | Mortgage and loan fees |
| Loan penalties recorded in the liability ledger | Mortgage and loan penalties |
Here, grants means loan funds advanced by the lender, rather than grant income.
Available labels depend on the account and category tree. Use the relevant protected financing categories so Worthic can apply the correct reporting behavior.
Choose where payment details come from
Open the bank transaction and select its reporting line and financing category.
Where liability accounts are available, the editor asks you to Select a liability account to link with this transaction.
The selected account determines how Worthic handles the payment:
| Selection | Reporting behavior |
|---|---|
| None, or a liability account without transaction tracking | The bank transaction supplies the payment’s cashflow, with an optional breakdown of interest, fees, and penalties. |
| A liability account with transaction tracking | The liability ledger supplies the repayment and its separately recorded charges; link the corresponding bank transaction to avoid duplicate reporting. |
When using a liability ledger, review the possible matches and save the chosen pair.
If a payment is set to use the liability ledger but the ledger payment has not been recorded, that payment will not appear in cashflow from the bank transaction alone.
Loan advances are an exception: their cashflow is always reported from the bank side.
Add a bank-payment breakdown
When the bank transaction supplies the payment details, choose Yes under "Provide a payment breakdown?" (personal reporting lines) or "Provide a payment breakdown for P&L?" (business and real estate reporting lines).
Enter the amounts for:
- Mortgage and loan interest.
- Mortgage and loan fees.
- Mortgage and loan penalties.
Worthic calculates the principal as the payment amount minus those three components. Their total cannot exceed the payment.
For example, a payment of 2,000 containing 450 interest and 50 fees leaves 1,500 principal.
The full 2,000 remains one cash payment. The breakdown does not create additional cash movements.
For Business and Real Estate profit-and-loss reporting, the recorded interest, fees, and penalties provide the financing-cost detail. The principal portion is not treated as a financing expense in P&L.
If you choose No, Worthic still reports the full cash payment but does not infer an interest, fee, or penalty amount for P&L.
Link a bank payment to its liability transaction
When both accounts contain the same payment:
1. Open the bank transaction and select the relevant liability account.
2. Select View possible matches.
3. Compare the accounts, descriptions, dates, amounts, and directions.
4. Select Link beside the correct counterpart.
5. Choose the Reporting line for both transactions and Cashflow date for both transactions.
6. Save the transaction.
You can also start from an existing liability transaction and look for its bank counterpart. A new liability transaction must be saved before you can search for its corresponding bank record.
The first possible match may be marked Suggested, but you should still check it. Matching transactions can initially have different categories or reporting lines.
Saving the link aligns the reporting line, the appropriate payment categories, and the cashflow date. It preserves the original imported Ledger dates.
Linking does not confirm either transaction. Review and confirm pending transactions separately.
Use liability-ledger charges
When the liability ledger supplies the financing information, its repayment transactions provide the payment cashflow, while separately categorized interest, fees, and penalties provide the financing-cost detail.
Do not add a second manual breakdown to the bank payment for the same charges. Bank transactions that are correctly linked to a liability ledger do not offer manual breakdowns, but if not linked, it is possible to provide a manual breakdown of charges that already exist in the liability ledger, causing a double-counting of those charges.
Extra payments and loan advances
Use Mortgage and loan extra payments for additional payments toward the loan, and Mortgage and loan grants for money advanced by the lender.
Loan advances are counted in cashflow from the bank transaction only. A corresponding liability entry increases the recorded debt but does not create another cash inflow.
If a liability advance has no corresponding bank cash movement, the editor offers "Mark as non-cash advance". Use this only when the entry genuinely represents a non-cash increase in the liability.
In Personal cashflow reporting, loan advances and extra payments receive transfer treatment. In Business and Real Estate reporting, they appear within the applicable financing activity classifications.
Dates and accrual
The Cashflow date determines when a payment or receipt appears in cashflow reporting.
Where Accrual accounting applies, bank-payment breakdowns offer Edit dates for interest, fees, and penalties. Each component can have its own accrual date, or you can select Use cashflow date.
For separately recorded liability charges, review the transaction’s applicable accrual date and amount.
Accrual settings change the timing or value used in accrual-based reporting; they do not create additional bank movements.
Missing or incorrect matches
If Worthic shows No matching transaction found, check that:
- The counterpart has been imported or entered.
- You selected the correct liability account.
- Both accounts cover the relevant period.
- The amounts, currencies, and transaction directions are appropriate.
- You have access to both accounts and the relevant reporting line.
Older transactions may have no counterpart because one account’s imported history starts later than the other’s.
If the liability account history goes further back than the bank account history, there is no corresponding bank transaction to link. Repayments recorded in the liability ledger can still appear in cashflow without a matching bank transaction.
Regular repayments appear as debt payments for Personal reporting lines and financing activities for Business and Real Estate; Personal extra payments receive transfer treatment. Separately recorded interest, fees, and penalties supply the applicable Business or Real Estate P&L detail. Liability-side loan advances do not create cash inflows—those require a corresponding bank transaction.
If the bank account history goes further back than the liability account history, Select None in the liability-account dropdown for those older transactions so the bank transaction supplies the cashflow; selecting a transaction-tracked liability account would instead make reporting depend on the missing ledger payment.
Regular payments appear as debt payments for Personal reporting lines and financing activities for Business and Real Estate, while Personal extra payments and advances receive transfer treatment. For Business and Real Estate payments, enter a payment breakdown if interest, fees, or penalties should also appear in P&L; otherwise, only the cash movement is reported.
Do not link a different payment simply to clear a warning. If the payment is intended to report from the liability ledger, record or import the missing ledger entry. If no detailed liability ledger is being maintained, review whether bank-based reporting is the appropriate selection.
If a bank payment already has a manual breakdown, review and change its liability-account selection before trying to link it to a ledger payment.
Remove or correct a link
Open a linked transaction and select Cancel link, then save the change.
This removes the relationship; it does not delete the underlying bank or liability transactions. Review the resulting reporting source and any unmatched warnings afterward.
If the counterpart is outside your account access, Worthic may show that a link exists without exposing the other transaction. Ask a workspace owner or another authorized user to review it.
Cashflow, balances, and confirmation
Cashflow shows the payment or receipt using the selected financing source. Profit and loss uses the applicable interest, fees, and penalties rather than treating the entire repayment as an expense.
Account balances continue to reflect the records maintained in each account. Matching connects the two sides of financing activity; it does not merge the accounts.
Pending transactions already in the ledger can affect balances and reporting. Confirming them records that they have been reviewed, while linking them resolves their financing relationship.