Calculate the Regular Payment with a Specified Balloon
Structure a loan to meet your needs.
To set your preferred currency and date format, click the “$ : MM/DD/YYYY” link in the lower right corner of any calculator.
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A Step-by-Step Tutorial Tutorial 8
Calculate the periodic payment amount required to reach a user-specified final balloon payment. While many financial calculators can calculate a balloon payment, the Ultimate Financial Calculator and the Balloon Payment Calculator can also calculate the regular periodic payment required to reach a specific balloon amount. This allows you to structure a loan to meet your requirements.
All users should first complete the more detailed initial tutorial to understand the Ultimate Financial Calculator’s (UFC) basic concepts and settings.
To create a loan schedule with a known balloon payment amount and unknown periodic payments, follow these steps.
Set Schedule Type to Loan.
Alternatively, click to clear any existing entries.
Click , then select Rounding Options. Set “Rounding” to Open balance — no adjustment.
In the header section, apply the following settings:
Select Normal for Calculation Method.
Set Initial Compounding to Monthly.
Enter 6.75 for Initial Interest Rate.
In row 1 of the cash-flow input area, create a “Loan” series.
Set the “Date” to July 1, 2020.
Set the “Amount” to 365,000.00.
Set “# Periods” to 1.
Note: Because the number of periods is 1, you will not be able to set a frequency. If a frequency is entered, the value will be removed when you exit the row.
Move to the second row of the cash-flow input area. Select “Payment” for the “Series” type. This example creates a schedule for a mortgage with a balloon payment of $250,000 due after 5 years (at the 60th monthly payment).
Set the “Date” to August 1, 2020.
Set the “Amount” to “Unknown” by typing U. Fig. 1.
Set “# Periods” to 60.
Enter the known final balloon payment.
Move to the third row of the cash-flow input area. Select “Payment” for the “Series”.
If the date is not already set, enter the date as August 1, 2025 (end of the 5th year).
Set the “Amount” to 250,000.00.
Set “# Periods” to 1.
Fig. 1 Calculate periodic payment amount for a balloon loan
Click . The regular payment required to reach a $250,000 balloon payment after 5 years is $3,689.51. Fig. 2.
Fig. 2 Periodic payment calculation result
To view a detailed amortization schedule that shows the calculated periodic payments and the final balloon payment, click on the button bar.
When a loan does not follow a conventional payment schedule, you need a financial calculator that supports flexible entry of irregular cash flows. The Ultimate Financial Calculator allows multiple payment streams with varying dates and amounts.
