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Balloon loan - a whimsical name don't you think for a potentially risky financial product?

What is a balloon loan?

Wikipedia defines a balloon loan or mortgage as a loan "which does not fully amortize over the term of the note, thus leaving a balance due at maturity. The final payment is called a balloon payment because of its large size."

This Balloon Loan Calculator will not only calculate the final balloon payment, but it will also help you structure a loan to meet your exact needs.

Check out these additional loan scenarios:

  • Want to know what periodic payment will result in a specific final balloon amount? This calculator will calculate the regular payment.
  • Or do you need to set the regular payment to an agreed upon, but nontraditional amount before calculating the balloon? This calculator is capable of doing that calculation as well.
  • Or do you have a budget for both the periodic payment and the balloon payment and you want to know how much you can borrow? This calculator can use your inputs to calculate the loan amount.
  • Or do you want to calculate the periodic payment using say a 30-year term while the balloon is computed using a 7-year term? Yup, you can do that calculation too. See "Doing the Two-Step" below
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Using the Balloon Loan Calculator

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As mentioned, a balloon loan is a loan that has its regular periodic payment calculated using one term (say 30 years) when the last payment is due sooner (say in 7 years).

If you do not know the amount of the regular loan payment, then we must calculate it before we can calculate the final balloon amount.

Example: Assume you are considering a mortgage for $146,500. You want the monthly payment calculated based on a 30-year loan, but you'll pay the balance after 72 months.

Doing the Two-Step

Step 1: Enter:

Amount of Loan?:$145,500.00
Annual Rate?:4.5000%
Balloon Due at Payment? (#):360
Periodic Payment?:$0.00
Final/Balloon Payment (can be 0)?:$0.00

When you enter "0" for both "Periodic Payment" and "Final/Balloon Payment," you are setting up the calculator to calculate a level payment for the entire term of the loan. That is the final payment will not be a balloon payment.

Click "Calc" and here are the results. $737 is the "regular" payment amount for a 30-year loan. (The final payment gets rounded by less than $2.00 or less than $0.01 per each regular payment.)

Periodic Payment?:$737.23
Final/Balloon Payment (can be 0)?:$735.27

Step 2: Now to calculate the balloon payment amount, with the balloon due after six years, set the calculator as follows:

Amount of Loan?:$145,500.00
Annual Rate?:4.5000%
Balloon Due at Payment? (#):72
Periodic Payment?:$737.23
Final/Balloon Payment (can be 0)?:$0.00

Click "Calc," and this is the balloon that will be due in the final month of the sixth year if the debtor makes payments based on an assumed term of 30 years:

Final/Balloon Payment (can be 0)?:$130,433.50
Amortization schedule
Amortization schedule showing final balloon payment.

If that's what you wanted to know - what the balloon payment amount will be for a loan, then you're finished.

But with this calculator, it's possible to do more. You can structure a loan, just the way you want it.

Other scenarios - very flexible!

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Example 2: Pick the balloon payment amount and calculate the periodic payment:

Amount of Loan?:$145,500.00
Annual Rate?:4.5000%
Balloon Due at Payment? (#):72
Periodic Payment?:$0.00
Final/Balloon Payment (can be 0)?:$100,000.00

Result:

Periodic Payment?:$1,110.73

Example 3: Pick any periodic payment amount:

Amount of Loan?:$145,500.00
Annual Rate?:4.5000%
Balloon Due at Payment? (#):72
Periodic Payment?:$2,000.00
Final/Balloon Payment (can be 0)?:$0.00

Result:

Final/Balloon Payment (can be 0)?:$27,541.94

Example 4: Pick your payments and see what you can borrow:

Amount of Loan?:$0.00
Annual Rate?:4.5000%
Balloon Due at Payment? (#):72
Periodic Payment?:$1,000.00
Final/Balloon Payment (can be 0)?:$50,000.00

Result:

Amount of Loan?:$84,794.97

Balloon Amortization Schedule with Extra Payments

The calculator's support for extra payment is very flexible. First, you'll notice the calculator prompts you for "Extra Payments Start?" date. You can, therefore, schedule extra payments between the regular due dates if doing so is better for your cash flow.

As mentioned elsewhere, the calculator allows for a one-time extra payment or for multiple extra payments. The multiple extra payments can be for 2 or any number up until the loan is paid-in-full. (In that case, set the number of extra payments to "Unknown.")

When the extra payments are "off-schedule," the calculator prepares an expanded amortization schedule, showing the payment being applied 100% to the principal with interest accruing.

Balloon loan schedule with interest only payments and a lump sum extra payment
Balloon loan schedule with interest only payments and a lump sum extra payment.
Note how the interest-only payment drops from $545 to $526 after the extra payment.

This is the correct way to apply the payment - something that other online calculators don't usually handle properly. That is if they even let you plan for extra payments between regular payments.

The Interest-Only Payment Method is a Special Case

Most frequently, the periodic payments get allocated to both principal and interest. Thus with each payment, the loan balance is being reduced.

But what if the borrower wants to pay even less per period?

If that's the case, the lender may agree to make the balloon loan one where the borrower pays only the interest due on each payment date. Paying only the interest each period reduces the payment amount even more for the borrower.

Interest-only option selected for the regular periodic payments
Interest-only option selected for the regular periodic payments

This calculator supports interest-only payments (select the option under "Amortization Method"). If you select it, however, the calculator works slightly differently.

  • First, the balloon payment will always be equal to the loan amount. Therefore, it isn't possible to solve for the balloon payment.
  • Or looked at in a different way, the user cannot provide a periodic payment amount. The calculator will always calculate the regular payment amount since it is the interest due.
  • When introducing extra payments into the interest-only cash flow, the calculator's main window shows the amount of the first interest-only payment. But after each prepaid principal amount, the subsequent payments will be reduced since prepaying lowers the loan balance which, of course, reduces the interest due.

Given the above, if you select interest only, in almost all cases, to use the calculator, you'll want to set both of these inputs to 0.

Periodic Payment?:$0.00
Final/Balloon Payment (can be 0)?:$0.00

Charts

As the day winds down, I go cross-eyed looking at columns of numbers. That's where cash flow charts come in handy. You can quickly learn the relationship between the principal, interest and optional extra payments.

This calculator creates 3 charts.

Balloon payment chart
Chart depicting regular periodic cash flow with a large final balloon payment.
  • The annual chart compares total interest and principal paid each year.
  • The accumulated chart shows the amounts allocated to the principal and interest since the start of the loan.
  • The pie chart clearly shows the relationship between total interest and principal with calculated percentages.

Bloggers, feel free to use these charts to make your point. Click for several export options.

Should I take out a balloon loan? There's Risk!

Balloon loans have their advantages. The borrower gets to borrow a large amount, for a short period, while making relatively small periodic payments.

However, the borrower should only consider this loan type if they are confident that they'll have the funds available or that they'll be able to refinance the loan in time to make the balloon payment when it comes due. Otherwise, the borrower will most certainly default on the terms of the loan, and they risk ruining their credit rating.

You can leave your comments and questions below.

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57 Comments on “Balloon Payment Calculator”

financial online calculator Join the conversation. Tell me what you think.
    • Not sure if you’re just telling me how you are using this calculator, or if you have a question how to calculate what you need? This calculator will handle that calculation. If you need to know how, please give me some example numbers and I’ll explain how it’s done.

      • Hi there!!

        The loan amount is $120,813.87 with interest of 7% starting 12/28. First payment 1/28 payable monthly until 10 years. Fully amortized over 20 years.

        • Okay, that’s helpful.

          Since the payment amount for a 20 year amortization is currently not known, you’ll have to do this calculation in 2 steps.

          Step 1:

          1. Set "amount of loan" to $120,813.87
          2. Set "annual rate" to 7%
          3. Set "balloon due at payment #" to 240 (since we need to know the payment amount for a 20 year monthly loan)
          4. Set "periodic payment" to "0", since this is an unknown value.
          5. And another step that is not obvious, set the "final balloon payment" to 0.01. (We want the balance to be 0 after 20 years, but 0 tells the calculator to calculate the amount, so we have to fudge with a 1 cent balance 🙂 )
          6. Leave the other settings as they are.
          7. Calculate. The 20 year payment will be $938.47.

          Step 2:

          1. Leave the first 2 inputs as they are after the above calculation.
          2. Change the "balloon due at payment #" to 120.
          3. Leave "periodic payment" set to the prior calculated result
          4. Set "final balloon payment" to "0".
          5. Now calculate again.
          6. You are ready to view your schedule with a balloon at 10 years.

          If you want a balloon schedule where you have control over the dates, you can use this amortization schedule, or this loan calculator or this financial calculator. For the 1st two calculator, enter the values as calculated and they will create a schedule with the dates you set. For the last calculator, scroll down the page to the tutorials.

          🙂

    • With this balloon calculator, you can’t. However, this amortization schedule will create a balloon payment schedule and you can set both the loan date and first payment date. To use for a balloon schedule, enter all 4 values (loan amount, number of payments [payment number balloon is due], interest rate and normal payment amount) and calculator will show final balloon payment.

      If you don’t know all 4 values, then solve for the one unknown, and then rerun setting the number of periods to when the balloon is due. If you have any questions, just ask.

      • I’m trying to figure a monthly payment on a mortgage with yearly balloon payments. This would be a 30 year but rather than $140,000 due at the end it’s $5000 yearly starting in year 2-29.
        I don’t want it to reflect an earlier payoff, I want it to lower the monthly payment over the full 360 months accounting for that $140,000.

        Thanks

        • You’ll need to use this financial calculator.

          Scroll down the page to the list of tutorials and check out #1 for an overview of how the calculator works. Basically, you’ll enter rows for the number of unknown monthly payments followed by rows of the $5,000.

          Please ask if you have any questions. The calculator will do what you need.

  • We have financed a balloon loan for a 10 year and set it up on a 15 year note. How do you figure the interest paid and final payment if the borrowers pay monthly 2,000 and the. monthly payment is 1595.95. Loan amount 180,830.00 at 6%.

    • If they paid $2,000 monthly, then don’t use $1,595.95 as the payment, use $2,000. The calculator will accept anything for the payment amount that you enter. You’ll want to set the balloon payment to unknown and let the calculator calculate it, using the $2,000 payment.

      Does that answer your question?

      You might want to also check out this financial calculator. It lets the user enter payment as they are made on the date they are made. If you go to this calculator’s page, scroll down to the tutorials. #25 deals specifically with tracking loan payments.

  • – Loan amount $116,000
    – Loan term 72 months
    – Monthly payment $1,400
    – #1 Ballon payment at 5% in 3 years
    – #2 Balloon payment at 7% in 6 years

    Please tell me how to calculate it in your calculator..???

    • This calculator won’t allow for an interest rate change. However, the Ultimate Financial Calculator will support adjustable rates.

      Once on that page scroll down to the tutorials. There are 2 tutorials about balloon payments and at least one about adjust rates.

      If after looking at those (and the first one for a general overview about the calculator) and if you still have a question, then please ask it on that page.

  • I am trying to use the balloon payment schedule and to print it out. When I push ” print ” nothing happens. I am using an iPad with Hammermill print over wifi.
    Thanks

    • I’m sorry you are having problems printing. However, I just confirmed that I can print from Google Chrome on a desktop as well as from Safari using my iPhone X. So I don’t think there is anything wrong on my side, though there may be a specific problem with iPads that I don’t know about.

      Can you print from another application? If not, perhaps the iPad needs to be rebooted?

  • Hello – thank you for this calculator it is very helpful. Can you tell me how i could possibly add another extra payment? I originally paid an extra 1,000 per month towards principal for 6 months and then i changed that to 2,000 extra towards principal.

    • You’re welcome.

      You can’t do that with the balloon calculator, but you can do that with the Ultimate Financial Calculator.

      When you go to the page, scroll down to the tutorials. There a couple about balloon payments and extra payments. (I would start with tutorial #1 to get an overview.)

      Basically, the UFC will allow users to do anything because you have complete control over interest rates, payment dates, and amounts.

  • Karl, your calculators have been enlessly useful to me. I am just paying off the baloon loan I modeled with your tools over 5 years ago.

    I wanted to take a moment to thank you for making them available.
    Chris

  • I need to calculate a loan with all interest due at the end of the term…no monthly payment.

    Amount = $50,000
    Interest Rate = 6%
    Compounding = Monthly
    Term = 5 years

    Thank you….

    • Just to make sure I understand, are you saying there will only be one payment?

      If so, I would use this loan calculator and set the loan date and the first payment date and number of period to 1.

      If I misunderstood, let me know. I’m sure there’s a calculator here somewhere that will do what you need. 🙂

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