Balloon Payment

Glossary

Banking

Balloon Payment

A balloon payment is the payment of all of the principal on a bond, loan or mortgage at maturity. It is also referred to as a bullet payment. To avoid having to make a large principal payment in a single lump sum at the end of a debt facility, borrowers can issue so-called amortising facilities, where a portion of principal is paid along with interest payments over the life of the instrument.

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