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What is balloon maturity?

Though the term "balloon maturity" comes from bond issues, it is now commonly used to refer to large final payments to repay mortgages, often called a "balloon mortgage," commercial loans, and other types of debts. The term "balloon maturity" comes explicitly from bond issues. Bond issuers may avoid balloon maturity.

What are balloon maturities?

Balloon maturities can appear in mortgages and commercial loans, and their advantage is that the initial payments on these loans are lower. Balloon loans can be preferable for companies or people that have near-term cash flow issues but expect higher cash flows later, as the balloon payment nears.

What is a balloon payment on a mortgage?

There may be other resources that also serve your needs. A balloon payment is a larger-than-usual one-time payment at the end of the loan term. If you have a mortgage with a balloon payment, your payments may be lower in the years before the balloon payment comes due, but you could owe a big amount at the end of the loan.

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