Balloon Loan

A loan that provides you with lower-than-usual monthly payments for a set period of time followed by a payment larger than usual at the end of your loan repayment period. While a balloon loan may lower your monthly payments it can also mean you make higher interest payments over the life of the loan. Loan with balloon payments were very popular in the run up to the 2008 mortgage crash. They are still used in non conforming loan, and commercial loan deals.