Also known as a Construction Loan. Any of a variety of short-term (generally five to seven years) financings provided by a lender to a developer to cover the costs of construction and lease-up of a new building with the expectation that it would be replaced by long-term (or permanent) financing provided by an institutional investor once most of risk involved in construction and lease-up had been overcome resulting in an income-producing property.
Interim financing for leased-up properties often used to repay the construction loan; typically an interest only loan for two to ten years that cannot be prepaid.
Typically a loan with a 5- to 10-year term and no amortization. At the end of the term the full amount is due.
a term loan that calls for no amortization and a lump sum payment at maturity.
Generally, a loan where no principal repayments are made during the loan. Only interest is paid, leaving the total amount borrowed as a balloon payment at maturity.
Intermediate debt (5 to 10 years) without periodic payments but with the entire amount (balloon payment) due at the maturity date.
Any short-term, generally five to seven years, financing option that requires a balloon payment at the end of the term and anticipates that the loan will be refinanced in order to meet the balloon payment obligation. Essentially, should the refinancing not be available, often due to the property not performing as anticipated, the borrower is "shot" and the property is subject to foreclosure. An example of this is when a developer borrows to cover the costs of construction and carry-costs for a new building with the expectation that it would be replaced by long-term (or "permanent") financing provided by an institutional investor once most of risk involved in construction and lease-up had been overcome resulting in an income-producing property.
A loan that includes a call date earlier than its normal amortization period; also called a renegotiable rate loan or a rollover loan.
A fixed-rate loan of short duration that is generally amortized over a period of twenty to thirty years.
See rollover loan and term loan.
A bank term loan that calls for no amortization.
In banking and finance, a bullet loan (also referred to as a balloon loan) is a loan where a large payment or even the entire principal of the loan is due at the end of the loan term. A bullet loan can be a mortgage, bond, note or any other type of credit.