Commercial Mortgage, Payment, Balloon & the Yield Ladder

Calculates the monthly payment, mortgage constant, Year 1 interest and principal split, balloon balance at maturity, and the yield ladder from note rate to lender yield to effective borrowing cost, held to term or prepaid early. Inputs are the loan amount, note rate, amortization, term, origination points, third-party closing costs, and an optional prepayment year.

Interactive Tool

Loan terms

Loan amount

Interest rate (note rate)

Amortization

Term (balloon at maturity)

Origination fee (points)

Third-party closing costs

Prepay at end of year (0 = hold to term)

Your turn

Quote the payment, the balloon the borrower has to refinance, and what the lender actually earns on this loan.

A $16,000,000 first mortgage carries a 6.00% note rate, amortizes over 30 years, and matures in 10 years. The lender charges 2.00 points at closing and the borrower pays $80,000 of third-party costs. The loan is held to maturity.

Payments are monthly in arrears. Points are deducted from the funds the lender advances.

Monthly payment

Level payment on the amortization schedule. Within 0.25% counts as correct.

Balloon at the end of Year 10

Outstanding balance when the term expires. Within 0.5% counts as correct.

Lender yield

Annualized IRR on what the lender actually advances. Within 0.05% counts as correct.

Learn the concept

This calculator comes from the free Real Estate Finance course, where the concept is taught with readings, worked examples, and practice questions.

Open Real Estate Finance

Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.