Which type of loan is characterized by a balloon payment at the end of a shorter time frame than its amortization schedule?

A balloon mortgage is characterized by having a short term and a significant balloon payment due at the end of the loan period, which is typically shorter than the amortization schedule. This means that while the borrower may be making smaller monthly payments during the life of the loan, a larger final payment is required to pay off the balance in full. This type of loan structure can be attractive for borrowers who expect to refinance or sell the property before the balloon payment comes due, allowing them to benefit from lower initial payments.

In contrast, a conventional loan usually follows a more standard repayment plan without a balloon payment at the end. An adjustable-rate mortgage features fluctuating interest rates that can change periodically, affecting the monthly payment amounts but still does not inherently include a balloon payment. A fixed-rate mortgage has a consistent interest rate and payment schedule over the life of the loan, typically without a balloon payment either. Therefore, the defining feature of a balloon mortgage aligns directly with the question's requirements.