7-Year, 5-Year Balloon Mortgage

• A mortgage with periodic payments that do not fully amortize the loan. The outstanding balance of the mortgage is due in a lump sum at the end of the term.
  
• The advantage of a balloon mortgage is that the interest rate is generally lower than a fixed rate loan.
  
• The disadvantage is that at the end of the term you will need to come up with a lump sum to pay off the loan.
  
• There are options to chose a balloon loan with refinancing options, which allow you the opportunity to convert to a fixed rate loan at the end of the balloon period – pending certain conditions are met.