You may have already known that a mortgage can be the best solution to take when you need quite big funds. This loan type has a long term payment. You can pay the installments monthly up to 30 years or even more. Since not everyone favors the long obligation to make continuous payment for both principal and interest, there is one solution called a balloon loan.
The amount of money that will be obtained from the balloon loan can be as big as the mortgage. The difference is seen on the period of installments. The balloon loan is shorter. Besides that, you will see the different scheme of payment compared to the conventional mortgage. The first few months or years installments may use amortization method. And for the last payment, there will be called balloon method where you will have to pay off the rest of the owed money. Are you wondering how to set the payment schedule? You just need a Balloon Loan Calculator. With the simple calculation using MS Excel, you are able to find out how much money to pay off for the monthly payments and the balloon one. You can download and play around with balloon loan payment calculator template created with excel below, to give you more understanding about this loan payment method.
You have to consider about your affordability since there is a requirement to make the full loan payment at the end of the installment. The balloon loan is not for everyone, although it has a shorter term compared to the conventional mortgage.