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 Partial Amortized

Partial Amortized Mortgage

Partially amortized loans are when the repayment schedule of a loan calls for a series of payments followed by a balloon payment at maturity.

 For example, a lender might agree to a 30-year amortization schedule with a provision that at the end of the tenth year all the remaining principal be paid in a single balloon payment. The advantage to the borrower is that for 10 years his monthly payments will be smaller than if he completely amortized his loan in 10 years. However, the disadvantage is that the balloon payment due at the end of the tenth year might be his financial downfall. Just how large that balloon payment will be can be determined in advance by using a loan progress chart. Presuming an interest rate of 15½% and a 30-year loan, at the end of 10 years the loan progress chart, shown below, shows that for each $1,000 originally loaned, $964 would still be owed. If the original loan was for $100,000, at the end of 10 years 100 x $964 + $96,400 would be due as one payment. This qualifies it as a balloon loan. 

Loan Progress Chart
Balance Owing On A $1,000 Amortized Loan
   
15½% Annual Interest


 Original Life (years)  

Age of
Loan

 

10
years

 

15
years

 

20
years

 

25
years

 

30
years

2

 

$902

 

$960

 

$983

 

$992

 

$996

4

 

768

 

906

 

959

 

981

 

992

6

 

585

 

833

 

927

 

967

 

985

8

 

337

 

732

 

833

 

947

 

976

10

 

 

596

 

823

 

920

 

964

12

 

 

411

 

742

 

884

 

947

14

 

 

158

 

632

 

834

 

924

16

 

 

 

482

 

766

 

893

18

 

 

 

278

 

674

 

850

20

 

 

 

 

549

 

793

22

 

 

 

 

378

 

715

24

 

 

 

 

146

 

609

26

 

 

 

 

 

464

28

 

 

 

 

 

268

30

 

 

 

 

 

A loan progress chart is not only useful for determining in advance the amount of the final payment in a partially amortized loan, but also for determining what portion of a fully amortized loan remains to be paid at any given moment in time. For example, a $10,000 amortized loan originally made for 30 years at 9½% interest is 6 years old. How much of the loan has been paid off and how much remains to be paid? In the loan progress chart below, enter the column marked "30" under the heading "original life in years." Then under "age of loan" find the 6-year line. Where they intersect you will find the number $953. This means that for each $1,000 of original loan, $953 remains to be paid. For a $10,000 loan, multiply by 10 and you will find that $9,530 remains to be paid. As you can see, on amortized loans with long maturities, relatively little of the debt is paid off during the initial years of the loan's life. Nearly all the early payments go for interest, so that little remains for principal reduction. 

Loan Progress Chart
Balance Owing On A $1,000 Amortized Loan
   
9½% Annual Interest


 Original Life (years)  

Age of
Loan

 

10
years

 

15
years

 

20
years

 

25
years

 

30
years

2

 

$868

 

$934

 

$963

 

$978

 

$987

4

 

708

 

853

 

918

 

952

 

971

6

 

515

 

756

 

864

 

921

 

953

8

 

282

 

639

 

799

 

883

 

930

10

 

 

497

 

720

 

837

 

902

12

 

 

326

 

625

 

781

 

869

14

 

 

119

 

510

 

714

 

828

16

 

 

 

371

 

633

 

780

18

 

 

 

203

 

535

 

721

20

 

 

 

 

416

 

650

22

 

 

 

 

273

 

564

24

 

 

 

 

100

 

460

26

 

 

 

 

 

335

28

 

 

 

 

 

183

30

 

 

 

 

 

Amortization Calculator and Schedule
Amortization Table

Partially Amortized Loan To Package Mortgage