A partially amortized loan will typically include what type of payment structure?

A partially amortized loan typically includes a balloon payment as part of its payment structure. This type of loan generally involves regular monthly payments that cover interest and a portion of the principal over a set term, but the loan is not fully amortized by the end of that term. As a result, the remaining balance becomes due in one large payment at the end of the loan period, known as the balloon payment.

In this structure, borrowers benefit from lower monthly payments during the term because the payments do not fully pay off the loan before the balloon payment is due. This feature can be advantageous for borrowers who expect to refinance, sell the property, or receive a lump sum of money before the balloon payment comes due.

Understanding this payment structure is crucial for anyone dealing with loan agreements as it highlights the potential financial implications and planning needed when the balloon payment becomes due.