How this calculator works
A partially amortized loan is paid by regular instalments calculated as if it would clear over a long amortization period, but the term is shorter. At the end of the term the remaining balance falls due as a balloon payment. The payment therefore stays affordable, but the borrower still owes a large share of the original amount. Common examples are interest-only or lightly amortizing commercial mortgages and some vendor-take-back loans. This model uses a fixed rate throughout, equal payments and no renewal or rate reset at the balloon date.
Formula
i = annual rate / payment periods per year; n = amortization years × periods per year. Payment A = P × i / (1 - (1 + i)^(-n)). Balance after t payments = P × (1 + i)^t - A × ((1 + i)^t - 1) / i. Balloon = balance at the end of the term. Total paid = t × A + balloon.
Worked example
A $300,000 loan at 6% amortized over 25 years but paid for 5 years before a balloon has a monthly payment of $1,932.90. After 60 payments the balance is $269,796.26, which is the balloon. Total paid over the term is $385,770.51, including $85,770.51 of interest, and $269,796.26 of principal is still outstanding when the balloon is due.
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Frequently asked questions
How is this different from a fully amortized loan?
A fully amortized loan has a term equal to its amortization, so the last regular payment clears the balance. Here the term is shorter, so a substantial balance remains and must be refinanced or paid in cash.
Why is the balloon smaller with a longer term?
Each regular payment reduces principal, so the longer you pay before the balloon date, the smaller the balance that remains. A longer amortization period has the opposite effect: it lowers the payment and raises the balloon.
What happens if I cannot pay the balloon?
The balance must be refinanced, the property or asset sold, or the loan renegotiated. Lenders assess balloon risk at origination, so do not rely on the estimate without confirming your renewal options.
Are the payments equal in this model?
Yes. Interest-only arrangements, step payments and rate resets are not included; they would change both the payment and the balloon balance.