This is an interest only balloon loan over 24 months at a rate of 8 percent

You see that the borrower still owes the lender $1000000 after 24 months

most construction loans to builders are this type. Suppose after 24 months, the builder asks extension of this loan for another year. The builder continues to pay monthly interest for the six month, thereafter he skips payment for three months, and then files for chapter 11.