What is a Mortgage Loan Payable?

A mortgage loan payable is a liability account that contains the unpaid principal balance for a mortgage. A business typically incurs a mortgage liability to acquire large assets, such as an office building, factory, or other types of real estate. These mortgages are typically repaid over an extended period of time, such as 10, 20, or 30 years.

Presentation of Mortgage Loan Payable

The mortgage loan payable that is to be paid within the next 12 months is reported as a current liability on the balance sheet, while the remaining balance is reported as a long-term liability. Given the length of most mortgages, this means that the bulk of the liability is classified as a long-term liability on a borrower’s balance sheet.