Partially Amortized Loan Calculator

A partially amortized loan combines features of standard amortizing loans and interest-only or balloon loans. Your monthly payment is calculated as if the loan would be fully paid off over a longer amortization period (e.g., 30 years), using the formula: M = P * [r(1 + r)^n] / [(1 + r)^n - 1], where M is the monthly payment, P is the full principal, r is the monthly interest rate, and n is the total amortization months. However, the loan actually matures much earlier (e.g., after 5 or 7 years). Because the balance is not fully paid down by the maturity date, the remaining principal becomes due as a single balloon payment, calculated by compounding the initial loan and subtracting the value of all prior monthly payments with interest.

Imagine you take out a commercial real estate loan of $400,000 at a 6% annual interest rate (0.05% monthly). You set the amortization schedule to 30 years (360 months) to keep monthly payments manageable, but the loan term (payment period) is set to 5 years (60 months). First, the calculator determines your monthly payment based on the 30-year schedule, which equals $2,398.20. Over the 5-year payment period (60 months), you pay a total of $143,892.00. Because your payments only slightly chipped away at the principal over 5 years, the remaining balance due as a balloon payment at month 60 is calculated to be approximately $372,450.

When dealing with partially amortized financing, always plan your exit strategy well before the balloon payment comes due. Common strategies include refinancing the remaining balance into a new loan, selling the underlying asset to clear the debt, or paying the lump sum outright using liquid reserves. Additionally, pay close attention to interest rate fluctuations if you plan to refinance, as market conditions at the end of your term can drastically impact your ability to secure favorable new terms.