Does anyone know the formula to calculate semi-annual interst only payments
with a balloon in 10 years? I thought it was IPMT, but it does not appear
correct. I thought the interest payment would remain the same for each
semi-annual payment until the principal balloon payment is made in year ten.

tmac --

Maybe I don't understand the problem. Let's say it's a $100,000 loan in
which you're paying back the interest (let's say 10%), every six months,
until the prinicipal is due back, after 10 years.

If that's the case, then you owe 1/2 year's worth of interest every six
months, which would be 5% of $100k or $5,000. At the end of the 10 years,
you'd pay back the original $100k principal.

I'm probably not understanding the situation, though. How is it different
from the above?

"tmac" wrote:

Does anyone know the formula to calculate semi-annual interst only payments
with a balloon in 10 years? I thought it was IPMT, but it does not appear
correct. I thought the interest payment would remain the same for each
semi-annual payment until the principal balloon payment is made in year ten.

On Jan 2, 3:06*pm, tmac wrote:
Does anyone know the formula to calculate semi-annual interst only payments
with a balloon in 10 years?

If the payment is truly "interest only", then the payment is simply
the balance of the loan times the applicable interest rate. For semi-
annual payments, the "applicate interest rate" is the annual rate
divided by two.

For example, for an interest-only loan of $10,000 at 5%, the semi-
annual payment is 10000*5%/2, which is $250. After 10 years, you
would have paid $60,000 in interest (total payments), and your last
payment would be $10,000 in addition to the interest ($250).


I thought it was IPMT, but it does not appear
correct. I thought the interest payment would remain the same for each
semi-annual payment until the principal balloon payment is made in year ten.