• A.CRE
    • Accelerator Home
    • A.CRE Home
    • CRE Event Calendar
    • CRE Job Board
    • Education
    • Library of Excel Models
  • TRY ACCELERATOR 2.0
  • COURSES
  • LEARN MORE
  • ENROLL
  • LOGIN
    • Accelerator Member
    • Enterprise Member
A.CRE AcceleratorA.CRE Accelerator
  • A.CRE
    • Accelerator Home
    • A.CRE Home
    • CRE Event Calendar
    • CRE Job Board
    • Education
    • Library of Excel Models
  • TRY ACCELERATOR 2.0
  • COURSES
  • LEARN MORE
  • ENROLL
  • LOGIN
    • Accelerator Member
    • Enterprise Member

Balloon Payment

  • Home
  • Balloon Payment

Balloon Payment

The final payment on a loan. In commercial real estate, the balloon payment is the entire outstanding balance of the loan as of the loan maturity date. A balloon payment is only due when the loan has not fully amortized.

For instance, a lender extends a mortgage loan of $10,000,000, for a term of five years, with interest-only payments for the entire five years. The balloon payment at loan maturity will be $10,000,000.

In another example, a lender extends a mortgage loan of $10,000,000, for a term of 10 years, with payments amortized over 30 years. While the loan is amortizing, it will not be fully amortized at loan maturity (year 10) and thus the borrower will owe a balloon payment for the balance due.

When underwriting a perspective loan, real estate lenders take special care to analyze the likelihood the borrower will be able to payoff the balloon payment at maturity. They use tools such as refinance analysis risk models to assess whether a payoff of the balloon balance is likely.

« Back to Glossary Index
  • Share:
A.CRE
A.CRE
AdventuresinCRE.com (A.CRE) was started by Spencer Burton and Michael Belasco during their first year of graduate real estate studies at Cornell University. The site was initially meant to fill a need for readily available real estate financial modeling tools. Today, it is the web's preeminent real estate financial modeling, careers, and education resource.

Previous post

Income Approach
September 17, 2021

Next post

Letter of Intent
September 17, 2021

You may also like

What’s New – Accelerator Changelog
9 November, 2021

Not yet an Accelerator member? Click here to learn more and to join. January 2022 Added the ‘Ground Lease Valuation Model‘ to the Financial Models Bundle Added a ‘Calculating Gross Returns vs. Net Returns’ section to the Adding GP Fees …

My Forums and Topics

  • New posts since last visit

Topic Tags

amortization (9) apartment (3) bridge loan (3) capital reserve (4) Cap Rate (8) Cash-on-cash (3) cash-on-cash return (3) catch up (5) Concessions (7) Construction Loan (3) debt (5) debt yield (3) Development (9) Direct Cap (4) discount rate (4) distributions (4) expense growth (4) gross up (4) growth (3) hotel (4) interest reserve (6) IRR (11) irr hurdle (3) Loss-to-Lease (11) mixed use (6) npv (4) portfolio (4) preferred return (6) promote (5) property tax (7) Refinance (4) renovation (5) rent roll (3) residual land value (3) RUBS (4) s-curve (3) Sensitivity (4) SUMIF (3) Tax (4) vacancy (3) value-add (8) Waterfall (11) wst macros (6) XIRR() (6) Yield on Cost (6)

Forum Navigation

  • A.CRE
    • Accelerator Home
    • A.CRE Home
    • CRE Event Calendar
    • CRE Job Board
    • Education
    • Library of Excel Models
  • TRY ACCELERATOR 2.0
  • COURSES
  • LEARN MORE
  • ENROLL
  • LOGIN
    • Accelerator Member
    • Enterprise Member
logo-eduma-the-best-lms-wordpress-theme

[email protected]

Company

  • About A.CRE
  • Library of Excel Models
  • CRE Careers
  • CRE Education

Accelerator

  • Login
  • Changelog
  • Courses
  • Enroll

Support

  • Accelerator Guide
  • Forums
  • Contact Us
  • FAQ

Other Resources

  • Glossary of CRE Terms
  • Graduate Education
  • CRE Interviews
  • Deep Dive Series

Presented by Adventures in CRE - Copyright 2021

  • Privacy
  • Terms
  • Disclaimer

Important: Access to take courses on this legacy platform will end October 1, 2022. Click here to learn how to transition to the new Accelerator 2.0. Dismiss