What is the final lump sum paid at the maturity date of a balloon mortgage called?

The final lump sum paid at the maturity date of a balloon mortgage is referred to as the balloon payment. This payment represents the remaining balance of the loan that has not been amortized over the short term of the mortgage. In a balloon mortgage, regular payments are typically made that cover only a portion of the interest, leading to a large remaining principal amount due at the end of the loan term. This large payment, which settles the outstanding balance, is distinctively called a balloon payment because of its significant size compared to the smaller periodic payments made throughout the duration of the loan.

In the context of balloon mortgages, understanding the balloon payment is crucial, as it can have a significant impact on a borrower's financial planning. The expectation of this final payment requires careful consideration when taking out such a loan, especially if the borrower does not foresee having the necessary funds at the maturity date.