Balloon loan

About balloon loan

Here you will find instructions on creating a loan product with a balloon schedule.

A balloon loan is a loan with low monthly payments, followed by a large final payment to repay the remaining balance at the end of the term.

There are two periods used to calculate the balloon schedule:

• Amortisation period - a longer period for calculating a monthly repayment amount based on classical annuity logic.

• Committed or commitment period - an actual (shorter) repayment period to calculate the final payment and set the full balloon schedule.

Balloon loan types

The balloon schedule is offered in two formats:

• Balloon - the payments occur on an agreed payment day.

• Balloon adjusted - if the payment day falls on a holiday, the repayment is postponed until the next working day.