When the amortized payment of a mortgage remains constant over the period of the loan but leaves an outstanding balance to be paid at the end, this payment is called a balloon payment.
A balloon payment is a one-time large-scale principal payment due at the conclusion of the loan term. Your mortgage payments may be reduced in the years prior to the balloon payment, but you may end up owing a substantial sum at the conclusion of the loan if you have one.
A balloon payment is an exaggerated one-time sum owed, typically after interest-only payments have been made throughout the term of the loan, rather than paying down the principal over the course of the loan. Lower monthly repayments are a major advantage of an RV or balloon payment.
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