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  #1  
Old 07-24-2008, 04:51 PM
invest invest is offline
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Default Balloon Mortgage

What does Balloon Mortgage means? How does it work? I've read that you can use Balloon Mortgage if you have poor credit but what does it mean?

thanks
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  #2  
Old 07-24-2008, 05:46 PM
trent trent is offline
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A balloon mortgage is a type of mortgage that still has a balance due on maturity date. The last payment (balloon payment) of a balloon mortgage is usually substantial in size. The balloon mortgage doesn't amortize fully over the term of the mortgage, instead using a amortization schedule of longer term mortgage. For example if you get a balloon mortgage of $100,000 for 10 years and you amortize it using a 25 years amortization schedule instead, you'll end up paying less monthly (compared to if you amortized the mortgage over 10 years), however a big chunk of your mortgage principal will be due back on the maturity date.
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Old 07-24-2008, 05:54 PM
Canadian Canadian is offline
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I know that you can get a balloon mortgage down in US, but I'm not sure about Canada. Does anybody know if any Canadian banks offer balloon mortgages?
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Old 07-25-2008, 01:55 PM
trent trent is offline
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Quote:
Originally Posted by Canadian View Post
I know that you can get a balloon mortgage down in US, but I'm not sure about Canada. Does anybody know if any Canadian banks offer balloon mortgages?
Yes, you can get a balloon mortgage in Canada, but in general they are very small percentage from the total number of Canadian mortgages.
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Old 07-25-2008, 07:20 PM
invest invest is offline
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Thanks! Maybe because it is not that popular in Canada I've never heard of it...
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  #6  
Old 07-31-2008, 04:27 PM
investor investor is offline
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Quote:
Originally Posted by trent View Post
A balloon mortgage is a type of mortgage that still has a balance due on maturity date. ....


however a big chunk of your mortgage principal will be due back on the maturity date.
Don't you think someone who got a balloon mortgage will be more likely to default on the loan?
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