Endowment mortgages do not amortise, and so are simple to track. You
make two payments each month - one to the lender to pay the interest on the
mortgage and the other to pay the insurance company as a premium on a
policy. Your premiums are then invested by the insurance company, and at
the end of the mortgage term, the accumulated sum is used to fully repay the
mortgage. Pension-linked mortgages are tracked in the same way:
- Set up a liability account to show the liability of your mortgage.
Enter the total amount of the loan as the opening balance of the account.
- Set up an asset account calculating the opening balance by taking into consideration
the current value of the endowment plan from your
last statement plus the payments you have since made.
- Each month, record the interest payment in your current account.
- Also, each month, you'll need to record the insurance premium payment
from the current account to the endowment asset account.
- Once a year, when you receive your annual statement from the insurance
company, adjust the balance of the endowment asset account. This can
be done by selecting the Update Balances from the Activities menu and
then choosing Update Cash Balance.
When it's time to pay off your mortgage, transfer the total mortgage amount
from your asset account to the mortgage liability account. Any remaining
balance in the asset account is the profit resulting from the endowment plan.
Best regards,
