Balloon Loan
From Open Risk Manual
Revision as of 22:41, 15 April 2019 by Wiki admin (talk | contribs) (Created page with "== 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...")
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
