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Glossary

What is Balloon Payment?

A balloon payment is a large lump-sum payment due at the end of a loan, covering the remaining balance that was not paid off through regular payments. Balloon structures are common in commercial real estate loans, where payments are calculated over a long amortization period but the loan matures sooner. Borrowers typically plan to pay the balloon by refinancing, selling the property or using cash reserves, so it is important to plan for it well in advance.

Example

A commercial mortgage amortized over 25 years with a 10-year term leaves a large balance due at year 10.

Related funding

Commercial Real Estate: Buy, refinance or improve the property you operate from.

Related terms

APR (Annual Percentage Rate)Bank StatementsBonus DepreciationAll terms

Questions about an offer? Your advisor will explain every term.
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