Partial Note Purchase
Selling only a portion of your note's future payments for cash now, while keeping the rest of the note (and its remaining payments) for later.
A partial note purchase lets a note holder sell some of the future payments for a lump sum today, then take the note back once the buyer has collected the agreed-upon portion. It is one of the most useful — and least understood — options for someone who needs cash but does not want to part with the entire note.
How a partial works
Instead of buying the whole note, the buyer purchases a defined slice. The two most common structures are:
- A set number of payments. For example, the buyer pays you a lump sum today in exchange for the next 96 monthly payments. After payment #96, the note reverts to you and you collect the remaining payments and any balloon.
- A portion of each payment. Less common, the buyer takes part of every monthly payment for the life of the loan.
The "set number of payments" structure is by far the most popular because it has a clear end date and a clean handoff back to the seller.
Why sellers choose a partial
- Keep an income stream. You raise cash now but still own the back end of the note.
- Sell less, lose less to the discount. Because you are only selling near-term payments (which are worth more in present-value terms), the effective discount on a partial is often gentler than selling the whole note.
- Hedge interest rates and risk. If you believe the borrower will keep paying, the reversion lets you benefit from the later payments yourself.
What buyers consider
The buyer of a partial still underwrites the borrower, the investment-to-value ratio, and the seasoning — but their risk is concentrated in the payments they actually purchased. If the note has a balloon payment, the parties must agree on who receives it, which materially affects pricing.
Reversion and servicing
When the purchased payments are complete, the note reverts to the seller. A well-drafted partial agreement and a neutral third-party servicer make the reversion clean: the servicer tracks the count of payments and redirects the cash flow back to you at the right moment. Always confirm the reversion terms in writing before closing.
Mortgage Note Capital offers partial purchases on qualifying notes — a good fit if you want cash today but would rather not sell your entire note.