Changing the balloon amount on a loan

For some types of loans, for instance Flexible mortgages, it is possible to borrow money against it for other purposes, such as home improvements.

When you put in an account adjustment, you may find that the balloon payment at the end of the loan gets adjusted to a value you were not expecting, and subsequently needs to be reset to the previous, or a new value.

Resetting this balloon payment may cause other terms of the loan to change, such as the length of the loan or the payments.

To change the balloon amount, you can follow the steps below:
  • Go to the loan account settings
  • Click on 'Change loan terms' (the wording might be different depending on the version of Microsoft Money you are using)
  • The box which appears will ask you which part of your loan do you want to change, as shown below:

    Change Loan: What part of your loan do you want to change

    You have three options - Other fees, Interest Rate or Other Loan Information. Choose the last option.
  • What happens next are a series of windows which allow you to change various parameters. The most important ones are the Interest Rate, Loan Length, Principal plus Interest and Balloon amount
  • The last of these is the balloon amount, and the window is similar to the one below:

    What is the balloon amount due at the end of the loan?

  • Work through the windows. However, you can leave one blank if you don't know the information, and Money can work out the value for you.

    For example, if you know the new balloon amount is going to be zero, the interest rate is unchanged and the payments are the same, leave the loan length blank and Money can work out the new length for you.
  • You'll eventually reach the calculation summary page. Pressing 'Next' on it will cause the program to work out whether the values work together. If they do, the balloon payment will be changed
  • Press the various 'Next' buttons to work through to the end of the wizard. The last step is the 'Summary Information', which is displayed below.

    Summary Information when changing a loan

  • Once you press 'Next', the loan account should be updated
This technique can be used to change the other important values (Interest Rate, Loan Length, Principal plus Interest) too.

Category: Loans

Keywords: Principal, Interest, Loan, Mortgage, Calculation, Balloon Amount

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