Balloon loan maturity payment
Calculate payments using a long amortization term, then repay the remaining principal at an earlier maturity.
How this works
First calculate the monthly payment for the full amortization term n: M = P × i/[1 − (1+i)^(−n)], where P is principal and i is annual percentage rate/1200; at zero interest, M = P/n. For each month through maturity, interest = opening balance × i and closing balance = opening balance + interest − M. The balloon is the balance remaining after the maturity-month scheduled payment.
Example
The illustration may use different inputs from the reproducible default inputs listed below.
With $100,000 at 6%, the monthly rate is 0.005. Payments are based on 360 months, but only 60 scheduled payments are made before the remaining balance is due. With all reset-default inputs, balloon balance after final scheduled payment: $93,054.36.
- Principal ($)
- 100000
- Annual rate (%)
- 6
- Amortization term (whole months)
- 360
- Loan maturity (whole months)
- 60
- Balloon balance after final scheduled payment
- $93,054.36
Scope and assumptions
Maturity must not exceed the amortization term. The balloon is owed in addition to the regular maturity-month payment; the final-payment figure includes both. Assumes a fixed rate and no fees, penalties or extra payments. Refinancing availability is not assumed.
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