# 30/5 Balloon Mortgage Amortization Example

Balloon Mortgage

Here we compare two mortgages for \$80,000. The first is a 30/5 balloon mortgage. It is amortized over 30 years; has balloon payment due in 5 years; and has a fixed interest rate of 3.5%. The other mortgage is a standard 30 year fixed rate mortgage at 4.5%.

After reviewing this example, enter your desired mortgage terms into the balloon mortgage calculator to help you decide which mortgage best meets your needs.

Balloon Payment: \$72,117
(Month 60)

In this example, the balloon mortgage has a monthly principal and interest payment of \$359 which is \$46 less than the payment for the 30 year fixed. However, this 30/5 has a balloon payment of \$72,117 due in 60 months. If the borrower is unable to refinance, they must be able to come up with the cash for the balloon payment. In addition to the refinance risk, the borrower also faces the risk of having to refinance at higher interest rates. The borrower will have to compare the benefit of saving \$46 per month for 60 months against the much larger risk. Other factors such as the probability the borrower will sell their home before the balloon payment is due should be considered as well.

MonthPrincipal
Interest
Payment
InterestPrincipalBalance
1\$359\$233\$126\$79,874
2\$359\$233\$126\$79,748
3\$359\$233\$127\$79,621
4\$359\$232\$127\$79,494
5\$359\$232\$127\$79,367
6\$359\$231\$128\$79,239
7\$359\$231\$128\$79,111
8\$359\$231\$128\$78,982
9\$359\$230\$129\$78,854
10\$359\$230\$129\$78,724
11\$359\$230\$130\$78,595
12\$359\$229\$130\$78,465
Year 1\$4,311\$2,776\$1,535
13\$359\$229\$130\$78,334
14\$359\$228\$131\$78,204
15\$359\$228\$131\$78,072
16\$359\$228\$132\$77,941
17\$359\$227\$132\$77,809
18\$359\$227\$132\$77,677
19\$359\$227\$133\$77,544
20\$359\$226\$133\$77,411
21\$359\$226\$133\$77,277
22\$359\$225\$134\$77,144
23\$359\$225\$134\$77,009
24\$359\$225\$135\$76,875
Year 2\$4,311\$2,721\$1,590
25\$359\$224\$135\$76,740
26\$359\$224\$135\$76,604
27\$359\$223\$136\$76,468
28\$359\$223\$136\$76,332
29\$359\$223\$137\$76,196
30\$359\$222\$137\$76,059
31\$359\$222\$137\$75,921
32\$359\$221\$138\$75,783
33\$359\$221\$138\$75,645
34\$359\$221\$139\$75,507
35\$359\$220\$139\$75,368
36\$359\$220\$139\$75,228
Year 3\$4,311\$2,664\$1,647
37\$359\$219\$140\$75,088
38\$359\$219\$140\$74,948
39\$359\$219\$141\$74,807
40\$359\$218\$141\$74,666
41\$359\$218\$141\$74,525
42\$359\$217\$142\$74,383
43\$359\$217\$142\$74,241
44\$359\$217\$143\$74,098
45\$359\$216\$143\$73,955
46\$359\$216\$144\$73,811
47\$359\$215\$144\$73,667
48\$359\$215\$144\$73,523
Year 4\$4,311\$2,606\$1,705
49\$359\$214\$145\$73,378
50\$359\$214\$145\$73,233
51\$359\$214\$146\$73,087
52\$359\$213\$146\$72,941
53\$359\$213\$146\$72,795
54\$359\$212\$147\$72,648
55\$359\$212\$147\$72,501
56\$359\$211\$148\$72,353
57\$359\$211\$148\$72,205
58\$359\$211\$149\$72,056
59\$359\$210\$149\$71,907
60\$72,117\$210\$71,907\$0
Year 5\$76,068\$2,545\$73,523
Grand
Total
\$93,312\$13,312\$80,000

## Balloon Mortgage Calculator - Help

Amortization Schedule
The amortization schedule show you how monthly principal and interest payment and principal balances change over the life of your loan.
Balloon Term
The Balloon term is the length of time after which the remaining principal balance on your mortgage is due. Mortgages usually have a balloon term that is the same as the amortization term. Your final payment for those mortgage may be slightly different. Mortgages where the balloon term is shorter than the amortization term are called balloon mortgages. These typically result in a very large final required payment and, thus, are much riskier mortgages.
Interest
The portion of your mortgage payment that is due to the interest rate being applied to the principal balance. The Total Interest for a mortgage is the sum of all interest paid over the life of a loan.
Interest Rate
The percentage of the principal balance of your mortgage that determines how much interest you must pay. The interest rate on your mortgage may change or remain the same depending on the type of loan you have.
Loan Amount
The initial principal balance or your mortgage at closing.
Principal
The portion of your mortgage payment that is used to pay down the current balance of your mortgage. The principal balance represents how much you owe on the mortgage.
Term
The amortization term is one of the key factors that determine your required mortgage payment. Your required mortgage payment for fully amortizing mortgages is the amount that would result in the mortgage being closest to being paid off by the end of the amortization term. Longer amortization terms result in lower required mortgage payments for fully amortizating mortgages, all other things being equal.