Balloon Payment

What is a Balloon Payment?

A balloon payment loan is a loan that has a payment left at the end of the loan which must be paid, they are more common in commercial real estate and may be fixed or variable.

Is a balloon payment loan better?

Generally where the mortgage is more expensive then the average loan or more then the borrower can afford at the time they are more suited.

What is the standard home loan?

Fixed rate loans are the most popular in the United States and a generally fixed for 15 and 30 years but outside the period they are fixed for is a lot lower.

What are the advantages of a balloon payment loan?

If a company is starting up and can't afford the repayments at the time of purchasing but is expecting to grow, this loan could be more suited.

What are the disadvantage of a balloon payment loan?

At the end of the period of the loan you may have to pay a large sum of money.