Mortgage Payable
A long-term loan secured by real estate, typically requiring regular principal and interest payments over an extended period until the property is fully paid off.
Mortgage Payable
A long-term loan secured by real estate property, typically requiring periodic payments of principal and interest over an extended period.
For instance, a business might have a $500,000 mortgage payable on its office building, making monthly payments of $2,800 that include both principal reduction and interest expense over a 30-year term.
Mortgages provide financing for property acquisition while using the property itself as collateral, typically offering lower interest rates than unsecured loans. On financial statements, the principal due within one year is classified as a current liability, while the remainder appears as a long-term liability, with interest expense recognized on the income statement.