Private lending methods

[Devon Cornwall]

Hi Bigger Pockets!

I was listening to show 36 today and they were talking to @Kevin Perk. He was discussing how he sets up a 5 year balloon payout but I was wondering if anyone could explain the structure of the contract with me.

Say I borrow $80,000 from a private lender, they agree to terms of 8%, and have a balloon buyout clause with a 5 year term where they have the option to roll their current equity forward or they can take their money on the buyout with a refi.

Is the 8% a monthly interest only payment that I'm making?

Thanks,