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#1
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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?
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#2
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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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No debt |
#3
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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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Bear with me please |
#4
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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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No debt |
#5
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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
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Don't you think someone who got a balloon mortgage will be more likely to default on the loan?
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