A loan referred to as a 30/15 and 180/360 represents which type of mortgage?

A loan referred to as a 30/15 and 180/360 is indicative of a balloon mortgage. In this context, the numbers describe the terms of the loan in which the initial financing period lasts for a specific duration, and upon conclusion of that period, the remaining balance is due in a lump sum.

In the case of a 30/15 mortgage, it typically means that the loan is amortized over 30 years (which dictates the monthly payments based on a 30-year schedule), but it has a maturity date of 15 years. This means that at the end of the 15 years, the borrower must repay the full remaining balance of the loan in one payment, which is the essence of a balloon mortgage.

Similarly, for the 180/360 designation, it follows the same principle: the borrower makes payments based on a 360-month amortization schedule for 180 months (15 years), after which the entire remaining balance is due.

This structure can appeal to borrowers who may plan to refinance or sell the property before the balloon payment is due, allowing them to benefit from lower monthly payments during the initial term while preparing for the lump-sum repayment later on. This characteristic distinguishes balloon mortgages from other common types,