Balloon mortgage Meaning and Definition
Balloon Mortgage
Pronunciation
/ˈbæloʊn ˈmɔrɡɪdʒ/
Part of Speech
Noun
Definition
A type of mortgage in which a large portion of the loan becomes due at the end of a set period, often with a balloon payment.
Examples
- John took out a balloon mortgage to buy his dream home.
- Theodore’s balloon mortgage was due in five years, requiring a huge payment.
Synonyms
- End payoff loan
- High-interest loan
Antonyms
- Fixed-rate mortgage
- Stable loan
Additional Information
Balloon mortgages are often used for short-term financing, as they offer lower initial payments. However, they can be risky as the large payment required at the end can be a significant financial burden. It’s essential to carefully consider the pros and cons before taking out a balloon mortgage.
Etymology
The term “balloon” refers to the sudden increase in payment required, much like how a balloon expands as it fills with air.
Usage Notes
Balloon mortgage is often used in the context of finance, particularly in discussions of mortgages and personal finance.
Cultural References
Notable appearances: None found.
Idiomatic Expressions or Phrases
None found.
Related Words or Phrases
- Mortgage
- Loan
- Interest rate
Collocations
- Balloon mortgage payment
- Balloon mortgage rate
- Balloon mortgage calculator
Frequency of Use
Common in financial discussions, particularly in the context of mortgages and personal finance.
Common Misspellings
Baloon mortgage, Balom mortgage, Moral mortgage