Balloon Payment Calculator
The monthly payment worked out over a long amortisation period, and the balloon balance left to pay when a shorter term ends.
Result…
How it's calculated
Payment = L × i ÷ (1 − (1 + i)^−n), i = yearly rate ÷ 12, n = amortisation months Balloon = L × (1 + i)^k − payment × ((1 + i)^k − 1) ÷ i, k = months until it is due
A balloon loan keeps the payment low by working it out as if the loan ran for many years, then asks for everything still owed after a shorter term. The balloon is often most of the original loan, because early payments are mostly interest. Many borrowers plan to refinance or sell before it falls due.
Your numbers, step by step
About the Balloon Payment calculator
This balloon payment calculator works out a loan whose payments are set as if it ran for many years, but which must be settled after a shorter term. Enter the loan amount, the rate, the amortisation period the payment is based on, and when the balloon falls due. It shows the monthly payment, the balloon balance still owed at the end of the term, how much you paid before it, the interest in those payments and the balloon as a share of the original loan. Balloon loans appear in some mortgages, business loans and car finance, and the final sum is often most of what was borrowed. The steps show the balance formula with your numbers, so you can plan for that last payment early.
How to use it
- Enter the “Loan amount” and the “Interest rate”.
- Enter the “Amortisation period”: the length the payment is worked out over.
- Enter when the “Balloon due after” falls, in years.
- Read the balloon payment, the monthly payment and the interest paid before the balloon.
Worked example
A 200,000 loan at 7% with payments worked out over 30 years costs 1,330.60 a month. If the balloon falls due after 7 years, the 84 payments add up to 111,770.82, of which 94,065.65 is interest. The balloon left to pay is 182,294.83, about 91.15% of the original loan, for a total of 294,065.65.
Updated
Questions people ask
How do I calculate a balloon payment?
Work out the monthly payment over the amortisation period, then the balance left after the payments you make before the balloon: L × (1 + i)^k − payment × ((1 + i)^k − 1) ÷ i, where k is the number of payments made.
Why is the balloon so large?
Early payments on a long amortisation are mostly interest, so the balance falls slowly. After 7 of 30 years, most of the loan is still owed.
Is the balloon paid on top of the last monthly payment?
It depends on the agreement. This calculator treats the balloon as the balance left after the last regular payment; some lenders combine that month's payment with it, so check your contract.
How can I make the balloon smaller?
A shorter amortisation period, a longer term before the balloon, or extra payments along the way all reduce it. Compare a fully repaid loan with the amortization calculator.
What should I check before taking a balloon loan?
How you will pay the balloon: savings, a sale or refinancing, which depends on rates and lending rules at the time. Rules for balloon loans differ by country and lender, so go through the terms with the lender or a financial adviser.