balloon payment
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A loan is an integral part of a property purchase process and the idea to buy commercial property can also remain a dream without availing a loan. So, it’s time to get introduced with the terminology Balloon Payment as it is a process to avail lump sum amount at the commencement of the loan period.

Concept of Balloon Payment

The balloon payment is a process to avail a heavy amount at the beginning of the loan tenure after which the borrower is required to pay back the small amount of EMIs i.e. the Equated Monthly Installments during the loan tenure and have to deposit a lump sum amount of money to close the loan amount. The balloon payment has tenure of 10 years and both the flat and fixed interest rate can be applied on this loan type.

The balloon payment also has some pros and cons. So, have a look at both of them one by one.

Pros:

  • The biggest advantage of a balloon payment is that it makes investment easy and hassle-free in the Indian real estate market. This amount reduces the down payment amount for the purchase of a commercial property.
  • The next big advantage of a balloon payment is that the EMIs amount comes crumbling down. The lump sum amount a borrower receives at the start of a balloon payment slashes the equated monthly installments by a huge margin.
  • Another big advantage of a balloon payment is the low-interest rate that is levied on the startups and small companies that might face financial crunch in initial stages but can gain profit in the long-term.

Cons:

The biggest drawback of a balloon payment is that the borrower has to repay a lump sum amount at the end of the loan tenure and collecting a big amount is not possible for every person owning a commercial property.

Shilpa Sardare Jain
Shilpa Sardare Jain is a journalist and works as a content writer with us. Her journalistic background helps her cater the viewers with accurate news about everything around. She is experienced at writing articles, blogs, features and news related to different genres. She started her career with News24 News channel and then worked with a leading digital media channel One India News and few others. Shilpa Sardare Jain is a joyful person who loves to explore new places and food when not working. Also, she has the zest for reading autobiographies of politicians who took the world by storm.