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Balloon Mortgage Formula

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Balloon Mortgage is a type of mortgage loan that requires the borrower to make relatively low monthly payments for a fixed period, followed by a large balloon payment at the end of the loan term. Check FAQs

BM = PV \cdot {(1 + R)}^{n} - PT \cdot ({(1 + R)}^{n} - \frac{1}{R})

BM - Balloon Mortgage?PV - Present Value of Original Balance?R - Rate of Interest per Annum?n - Frequency of Payments?PT - Payment?

Balloon Mortgage Example

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Here is how the Balloon Mortgage equation looks like with Values.

Here is how the Balloon Mortgage equation looks like with Units.

Here is how the Balloon Mortgage equation looks like.

20466.3092 = 505 \cdot {(1 + 0.56)}^{12} - 410 \cdot ({(1 + 0.56)}^{12} - \frac{1}{0.56})

20466.3092 = 505 \cdot {(1 + 0.56)}^{12} - 410 \cdot ({(1 + 0.56)}^{12} - \frac{1}{0.56})

20466.3092 = 505 \cdot {(1 + 0.56)}^{12} - 410 \cdot ({(1 + 0.56)}^{12} - \frac{1}{0.56})

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Balloon Mortgage Solution

Follow our step by step solution on how to calculate Balloon Mortgage?

FIRST Step Consider the formula

BM = PV \cdot {(1 + R)}^{n} - PT \cdot ({(1 + R)}^{n} - \frac{1}{R})

Next Step Substitute values of Variables

∴

BM = 505 \cdot {(1 + 0.56)}^{12} - 410 \cdot ({(1 + 0.56)}^{12} - \frac{1}{0.56})

Next Step Prepare to Evaluate

∴

BM = 505 \cdot {(1 + 0.56)}^{12} - 410 \cdot ({(1 + 0.56)}^{12} - \frac{1}{0.56})

Next Step Evaluate

∴

BM = 20466.3092415285

LAST Step Rounding Answer

∴

BM = 20466.3092

Balloon Mortgage Formula Elements

Variables

Balloon Mortgage

Balloon Mortgage is a type of mortgage loan that requires the borrower to make relatively low monthly payments for a fixed period, followed by a large balloon payment at the end of the loan term.

Symbol: BM

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Balloon Mortgage

Present Value of Original Balance

Present Value of Original Balance refers to the current worth of the initial amount of money or investment at a specific point in time.

Symbol: PV

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Present Value of Original Balance

Rate of Interest per Annum

Rate of Interest per Annum refers to the annualized interest rate charged on a loan or investment over one year.

Symbol: R

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Rate of Interest per Annum

Frequency of Payments

Frequency of Payments refers to how often payments are made within a specific period, such as daily, weekly, monthly, quarterly, semi-annually, or annually.

Symbol: n

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Frequency of Payments

Payment

Payment refers to the amount paid while financing an investment.

Symbol: PT

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Payment

Other formulas in Investment Banking category

Go Adjustable Rate Mortgage

ADRM = \frac{(P \cdot R) \cdot {(1 + R)}^{np}}{{(1 + R)}^{np - 1}}

Go Churn Rate for Customers

CRT = (\frac{TNCLP}{TNCCBP}) \cdot 100

Go 401(K) Calculator

KCL = O \cdot {(1 + R)}^{F \cdot npk} + (FARI) \cdot ({(1 + R)}^{F \cdot npk}) - (\frac{1}{R})

Go Asset Allocation

AA = 100 - A

How to Evaluate Balloon Mortgage?

Balloon Mortgage evaluator uses Balloon Mortgage = Present Value of Original Balance*(1+Rate of Interest per Annum)^Frequency of Payments-Payment*((1+Rate of Interest per Annum)^Frequency of Payments-1/Rate of Interest per Annum) to evaluate the Balloon Mortgage, Balloon Mortgage is a loan with low initial payments but requires the borrower to repay the balance in full in a lump sum. Balloon Mortgage is denoted by BM symbol.

How to evaluate Balloon Mortgage using this online evaluator? To use this online evaluator for Balloon Mortgage, enter Present Value of Original Balance (PV), Rate of Interest per Annum (R), Frequency of Payments (n) & Payment (PT) and hit the calculate button.

FAQs on Balloon Mortgage

What is the formula to find Balloon Mortgage?

The formula of Balloon Mortgage is expressed as Balloon Mortgage = Present Value of Original Balance*(1+Rate of Interest per Annum)^Frequency of Payments-Payment*((1+Rate of Interest per Annum)^Frequency of Payments-1/Rate of Interest per Annum). Here is an example- 20466.31 = 505*(1+0.56)^12-410*((1+0.56)^12-1/0.56).

How to calculate Balloon Mortgage?

With Present Value of Original Balance (PV), Rate of Interest per Annum (R), Frequency of Payments (n) & Payment (PT) we can find Balloon Mortgage using the formula - Balloon Mortgage = Present Value of Original Balance*(1+Rate of Interest per Annum)^Frequency of Payments-Payment*((1+Rate of Interest per Annum)^Frequency of Payments-1/Rate of Interest per Annum).

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Balloon Mortgage Formula

Balloon Mortgage Example

Balloon Mortgage Solution

Balloon Mortgage Formula Elements

Other formulas in Investment Banking category

How to Evaluate Balloon Mortgage?

FAQs on Balloon Mortgage

Variable Name