Balloon Loan: Difference between revisions
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* A large balloon amount may imply an elevated [[Credit Risk]] at the maturity date, e.g. if the borrower is counting on refinancing the loan and financing conditions deteriorate unexpectedly | * A large balloon amount may imply an elevated [[Credit Risk]] at the maturity date, e.g. if the borrower is counting on refinancing the loan and financing conditions deteriorate unexpectedly | ||
== See Also == | |||
* [[Balloon Mortgage]] | |||
* [[Refinancing Risk]] | |||
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[[Category:Loan Product]] | [[Category:Loan Product]] |
Latest revision as of 11:27, 10 June 2024
Definition
A Balloon Loan is a type of Loan where a significant part of the Principal Amount is due and payable in a single payment on the Maturity Date of the Loan.
Issues and Challenges
- A large balloon amount may imply an elevated Credit Risk at the maturity date, e.g. if the borrower is counting on refinancing the loan and financing conditions deteriorate unexpectedly