Non-amortizing Loan Definition

A non-amortizing loan requires periodic payments that match the interest accrual on the principal. This results in the principal remaining the same throughout the life of the loan; thus, it must be paid off in full at the end of the loan. Non-amortizing mortgages are often called balloon mortgages. While monthly payments on non-amortizing loans will be lower, when the loan matures the principal amount will still be due.