Equal Payments Mortgages

The equal payment mortgage is probably the most common mortgage type.  It requires you to pay the same amount each period (monthly or quarterly) for a specified number of periods.  Part of each payment covers the interest and the rest reduces the principal.

Equal Payment and a Final Balloon Payment
The equal payment with final balloon payment mortgage requires you to make equal monthly payments of principal and interest for a short period of time.  Then once the last mortgage installment is made, you must pay the balance in one payment, called a balloon payment.  Some lenders give an option to refinance the mortgage to help you extend the final balloon payment.  This type of mortgage offers the benefits of more cash available for other needs in your business.

Endowment Mortgage

An endowment mortgage is similar to interest-only mortgages, except the repayment of the principal comes from the proceeds of an endowment.  There are several types of endowments which are eligible for this type of mortgage: personal or executive pension plan policy, life assurance policy, or a personal equity plan.  The additional security provided by the endowment usually means a lower borrowing cost.

 

Interest Only Payments and a Final Balloon Payment

The interest only mortgage, makes your regular payments cover only interest. Your principal stays the same.  At the end of the mortgage term, you make a balloon payment to cover the entire principal and whatever the remaining interest. Long term, you pay more interest with this type of mortgage when you are not reducing the principal sum on which you pay interest.