Say you take out a 5-year loan of $100,000 amortized at 10 years but with a 35% balloon payment ($35,000) required at the end of the term.
Do you calculate amortization payment (excel: PMT) excluding the balloon amount then plug in the balloon amount at the end of the period in the amortization table?
If say you are to refinance the balloon amount again at the end of the term for another 5 years, would you simply use the balloon amount as the new beginning balance of the amortization table? (assuming constant interest rate).
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How would a 5-year loan on a 10-year schedule have only 35% required at the end of the term? By definition, shouldn't that be 50% (plus the last regularly scheduled payment)?
The way you would do this, is calculate your amortization payment on a ten year basis. You will partially amortize up to 5 years at which the remaining principle will be your balloon payment. That’s probably the easiest answer to this questions.
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