Balloon payment plan
Explanation:
Balloon loans are initially subject to relatively small monthly payments. Nonetheless, you must eventually pay for a big balloon.
The balloon payment is equivalent to the non-paid principal and interest accrued on a ballon hypothecary payable. The mortgage lender shall inform the creditor of the default and may begin foreclosure, when the ballon payment is not payable as due.
For example, If a person ABC takes a loan for 10 years. In this type of loan with no balloon payment, his/her entire loan will be amortised in small monthly payments till the time his/her entire loan is paid.
