Question

Daniel is due to receive the balance of his trust fund in 5​ years; as a result he has taken out​ a(n) ________ mortgage where he has made small payments for several years and will pay off the balance in one large payment with his trust funds.

Answer 1

Answer: Balloon payment mortgage

Explanation: In simple words, balloon payment mortgage refers to the form of mortgage in which the borrower has to pay small amount of money over a particular item and at the time of maturity he has to pay a lump sum amount that is called the balloon payment of that mortgage.

These types of mortgages are usually used by business organisation who are expecting high profits on a project after a certain period of time. Thus, the correct answer is balloon payment mortgage.