Definition of "Balloon"

Ann Ferguson, Broker real estate agent

Written by

Ann Ferguson, Brokerelite badge icon

Ferguson Hudson Realty

(1) Type of loan where the final payment is substantially greater than the previous payments; also termed partially amortized loan. A debt agreement might stipulate a balloon payment when future refinancing is expected. (2) Last lease payment for a lease asset. It includes the residual value of the asset, which is often greater than previous rental payments made during the lease period.

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