Lending Terms

Balloon Payment

The remaining principal balance due at the end of a loan term that has not fully amortized. Most commercial real estate loans have 5-10 year terms with 25-30 year amortization schedules, resulting in a large balloon payment at maturity. Borrowers typically refinance or sell the property to pay off the balloon.

Related Terms

Amortization

The gradual repayment of loan principal through scheduled payments over time. Commercial real estate loans typically have 25-30 year amortization schedules, meaning the payment is calculated as if the loan would be fully repaid over that period. Most loans have shorter terms than their amortization, resulting in a balloon payment at maturity.

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Balloon Payment

Related Terms

Amortization

More Lending Terms Terms

Loan Assumption

Rate Lock

Spread

SOFR (Secured Overnight Financing Rate)

Rate Cap

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