Balloon Mortgage Calculator
The balloon mortgage calculator below will allow you to find out how much your balloon payment will be when your term ends, your monthly payment, how much you will pay in interest and how much you will pay overall throughout the term. Input the specifics of your home and balloon mortgage to calculate the payments you will have to make.
What is a Balloon Mortgage
A balloon mortgage is a type of loan that allows borrowers to pay off the mortgage through fixed monthly payments and one lump sum payment at some point during or at the end of the term. Balloon mortgages have terms shorter than those of regular mortgages, typically 5 or 7 years. However, the fixed monthly payment you make with them is calculated based on an amortization period of 15 or 30 years. How a balloon mortgage works is that the borrower makes monthly payments in principal and interest and then, typically at the end of the term, they pay off the remaining principal balance through one lump-sum payment.
Using the Balloon Mortgage Payment Calculator
The balloon mortgage payment calculator above allows you to calculate:
- Your monthly payment
- Your balloon mortgage
- The total you will pay in interest
- The total payments you will make
- Any interest saved as a result of prepayments made
In order for the calculator to solve for these numbers, it will need some details regarding your balloon mortgage, such as:
- The home price
- The down payment
- The mortgage rate
- The amortization period
- When your balloon payment is due
- Whether you plan to make any prepayments
The prepayments section on the calculator allows users to see how their balloon payment would change if they were to make monthly, annually, or one-time payments on their balloon mortgage. By making prepayments, the borrower is paying off the principal balance faster, thus reducing the interest charged on it and the balance owed at the end of the term.
Calculator Terms Explained
If you are not sure on how to use the balloon mortgage payment calculator, here is a list of the terms used and their definitions.
Loan Amount - This is the amount that you will be borrowing from your lender. It is typically the home purchase price after the down payment has been deducted.
Amortization Period - The amortization period is the length of time it would take to pay off a mortgage completely by making fixed monthly mortgage payments. However, here, the amortization period is only used to calculate your monthly mortgage payments until your balloon payment is due.
Mortgage Rate - The interest rate will determine the amount of interest that you will pay for the loan amount you borrowed.
Balloon Payment After - This is also called the term in years. It shows when the balloon payment will be due. Depending on the time when your balloon payment is due, the number of fixed monthly payments will be decided.
Prepayment Amount - This is the amount that the borrower chooses to make as a prepayment either monthly, annually or as a one-time payment.
Total Payments - This is the total amount of money you will end up paying for the balloon mortgage. It includes the principal and interest. The number is calculated by adding up the balloon payment and monthly mortgage payments throughout the mortgage's term.
Balloon Payment - It is the lump sum you will have to make at the end of your mortgage's term.
Total Interest - This is the total interest that you will end up paying for your balloon mortgage throughout the term.
Interest Savings - In case that you do end up making prepayments on your balloon mortgage, you will end up saving in interest because you will be paying off principal faster.
Using the balloon mortgage payment calculator - Example
Imagine that you want to purchase a house worth $250,000 and can afford to make a 20% down payment on it. The mortgage rate charged by your lender is 7% and the balloon payment is due in 5 years. The amortization period for this loan is 30 years. You can make prepayments of $100 every month until the end of the term.
Home Price = $250,000
Prepayment Type = Monthly
|Output without prepayment||Output with prepayment|
Monthly Payment = $1330.6
Total Payments = $266,940