Balloon Mortgage Calculator
Balloon Mortgages, compared to other types of mortgages, aren't as common as other mortgages. A 'Balloon Mortgage' does not reduce over the chosen term of the mortgage. A 'Balloon Mortgage' allows you to pay smaller payments throughout the time of the mortgage, although it results in a larger balance once the mortgage has matured. The final payment of a 'Balloon Mortgage' is very large compared to the previous payments. A 'Balloon Mortgage' is commonly found when it comes to commercial real estate, such as startup business owners, rather than residential real estate, such as future homeowners. If a 'Balloon Mortgage' is taken out for a real estate property, the lender will most likely ask for proof of a financial plan to demonstrate how the recipient plans on paying the final payment.
'Balloon Mortgages' are commonly taken out for commercial properties due to startup business owners having faith in their business plan and believing they will have sufficient funds when the time comes to pay the final payment. They are also popular among small business owners due to them not having the funds to get a property to run their business from.
- A Balloon Mortgage is a long-term mortgage at a low-interest rate.
- A fixed amount is paid regularly for a shorter time until the final payment is due, which will be substantially higher.
- Amortization is when a certain amount is repaid periodically, including interest.