Commercial Loan Calculator
Commercial loan payment when the amortization is longer than the term: payment, balloon due at the end, total interest, fees and APR with fees. How it works
Use the Commercial Loan Calculator
About the Commercial Loan Calculator
A $500,000 commercial loan at 6.5%, amortized over 20 years and due in 5, costs $3,727.87 a month and leaves a balloon of $427,945.30 at the end of year 5. The commercial loan calculator adds the fees, $7,500.00 here from a 1% origination fee and $2,500 of other costs, and turns everything into an APR with fees of 6.88%.
$1,000,000 on a 25-year amortization: payment and balloon by loan term
| Loan term | Payment at 6.5% | Balloon at 6.5% | Payment at 7.5% | Balloon at 7.5% |
|---|---|---|---|---|
| 5 years | $6,752.07 | $905,621.73 | $7,389.91 | $917,325.62 |
| 7 years | $6,752.07 | $858,429.33 | $7,389.91 | $874,573.56 |
| 10 years | $6,752.07 | $775,113.83 | $7,389.91 | $797,175.39 |
Monthly payments. The payment depends on the amortization, so it is the same for every term; a longer term leaves a smaller balloon.
APR with fees on $500,000 at 6.5%, 20-year amortization, 5-year term
| Origination fee | Total fees | APR with fees |
|---|---|---|
| 0% | $2,500.00 | 6.63% |
| 0.5% | $5,000.00 | 6.75% |
| 1% | $7,500.00 | 6.88% |
| 2% | $12,500.00 | 7.14% |
Each row includes $2,500 of other closing costs. With no fees at all the APR equals the 6.50% rate. The payment stays $3,727.87 in every row.
Frequently asked questions
- How is a balloon payment calculated on a commercial loan?
- Work out the payment as if the loan ran the full amortization, make the payments for the loan term, and the balance left is the balloon. $500,000 at 6.5% over 20 years is $3,727.87 a month; after 60 payments $427,945.30 is still owed.
- What is the difference between amortization and loan term?
- The amortization sets the size of the payment; the term sets when the loan is due. A 25-year amortization with a 10-year term means 120 payments sized for 25 years, then a balloon. On $1,000,000 at 6.5% the payment is $6,752.07 and the balloon $775,113.83.
- How much interest will I pay on a commercial loan?
- On $500,000 at 6.5% with a 20-year amortization, $151,617.50 during a 5-year term. If the term runs the full 20 years there is no balloon and the interest is $394,686.58. The payment-by-payment schedule shows the interest share falling: $2,708.33 of the first $3,727.87 payment and $2,325.63 of the 60th.
- How do fees change the APR on a commercial loan?
- The fees are paid at closing and not added to the loan, so they leave the payment alone but reduce the money you receive. On the $500,000 loan, $2,500 of costs alone give an APR of 6.63%; adding a 1% origination fee makes it 6.88%, and a 2% fee 7.14%.
- Can I calculate quarterly or annual payments?
- Yes: monthly, quarterly, semi-annual or annual. The rate per payment is the yearly rate divided by the payments a year. Quarterly payments on the $500,000 loan are $11,213.00, with a balloon of $427,708.53 after 5 years.
- What happens when the balloon payment comes due?
- The whole remaining balance, $427,945.30 on the example loan, is due at once. Borrowers usually pay it by refinancing, by selling the property or from cash. A refinance is priced at the rates of that day, which nobody knows today: enter the balloon as a new loan amount at a few possible rates to see what the next payment could be.
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