If you’re weighing a partial mortgage note sale against a full sale, the right answer usually comes down to one thing: how much of your monthly income stream you’re willing to give up.
Most people who call us assume there is only one option: sell the note, get a check, done. That is true for many situations. But there is a second path that a surprising number of note holders never hear about – a partial mortgage note sale – and once they learn about it, it often changes their decision entirely.
If you hold a seller-financed mortgage note (a written promise from the person who bought your property to repay a loan over time), you have two ways to turn those future payments into cash today. Which one fits your situation depends on what you actually need, not on what you assume is possible.
What Is a Full Note Sale?
A full sale means you sell every remaining payment on your note to a note buyer. In exchange, you receive a lump sum of cash at closing. Once it is done, you are completely out. The note buyer takes over from that point forward, and your borrower – the person who bought your property – simply sends payments to the buyer instead of to you.
The case for a full sale:
- You receive the largest single lump sum available
- You sever all ties to the note with no more tracking payments, watching property values, or worrying about default
- One closing, one check, clean finish
- Ideal for estate settlement, when multiple heirs need to divide proceeds, or when you want a complete exit from the arrangement
The tradeoff:
- You give up every future payment
- Full sales typically carry a larger discount, because the buyer takes on all remaining risk over the life of the note
- If that monthly income was serving a real purpose – supplementing retirement or covering a recurring expense – losing it entirely may leave a gap
What Is a Partial Mortgage Note Sale?
A partial sale (often called simply a “partial”) means you sell only a set number of future payments, not the whole note. Say your note has 180 payments remaining. You could sell the next 60 to a note buyer, receive a lump sum of cash today, and once those 60 payments are collected, the payments revert back to you. Your monthly income picks back up right where it left off.
The payments the buyer receives are typically the next consecutive ones. Your borrower barely notices – they send their payment to a different address for a period of time, then back to you when it is over.
If you sell all or part of your note, the IRS may treat it as an installment sale – which can affect how you report the gain. IRS Publication 537 covers the details.
The case for a partial sale:
- You get the cash you need without walking away from the entire note
- Discounts on partials are often smaller than on a full sale, because the buyer takes on less risk (fewer payments, shorter time horizon)
- Your income stream returns to you after the partial period ends
- A natural fit when you need a specific amount — say $20,000 or $30,000 — rather than a full liquidation
The tradeoff:
- The lump sum is smaller than what a full sale would produce
- Not every note buyer offers partials, so it is worth asking upfront
- It requires tracking when the payments revert, though a good note buyer handles this for you
A Simple Decision Checklist
There is no single right answer. But these questions point most people toward the option that actually fits.
A full sale likely makes sense if:
- You want a complete exit with no ongoing responsibilities
- You are settling an estate and need a clean, divisible lump sum for heirs
- The monthly income no longer matters much to your financial picture
- You need the maximum amount of cash possible
A partial sale likely makes sense if:
- You need a specific amount of cash – for a home repair, medical expense, or helping a grandchild with a down payment – but you do not need to sell everything
- The monthly income still matters to you and you want it to return
- Your borrower has a solid payment history and you want to benefit from that long-term
- A smaller upfront amount covers your need, and keeping the note intact has value to you
If you are unsure how much you would receive under each option, we are happy to show you both numbers side by side before you decide. You can visit our Selling Mortgage Notes FAQ to get a fuller picture of how the process works, or go straight to a free quote.
Real-World Scenarios
Scenario 1: The quick fix
A retired couple sold their rental property with seller financing several years ago. They collect $850 a month and want to keep it. Their HVAC system needs replacement and the estimate is $18,000. A partial covering the next 28 payments gets them what they need, and in a little over two years, their monthly income comes back to them.
Scenario 2: The estate
A woman inherited a note from her father. Two siblings are also beneficiaries, and the family needs to split proceeds and close the estate. A full sale produces a single, clean lump sum that divides evenly. Nobody has to manage ongoing payments or coordinate with a note buyer after closing.
Scenario 3: The investor pivot
A landlord sold a property on an installment contract and holds a note with 14 years left. He has a new investment opportunity he wants to fund, but he has a great borrower and a solid interest rate — he does not want to give that up entirely. A partial covering the next five years gives him the capital he needs now, and the note reverts in 60 payments.
Scenario 4: The undecided
A woman in her late sixties is not sure which direction to go. She gets free quotes on both options. The full sale comes in at $74,000. The partial — covering 48 payments — comes in at $29,000, with payments returning to her afterward. Once she sees the numbers, the partial is the clear fit. She just needs to cover a specific expense and the income still matters to her.
One More Thing Worth Knowing
Partial sales are not widely advertised. Many note holders go through the whole process – make the call, share their documents, receive a quote – and only hear about the full sale option. If you are talking to a note buyer and they have not mentioned a partial, ask. A buyer who walks you through both options before you make any decision is one whose interests are actually aligned with yours.
At Porch Swing Funding, that is exactly how we work. We will show you what a full sale and a partial sale each put in your pocket, explain the tradeoffs plainly, and let you decide what fits your life.
Not sure which option fits your situation? We’ll walk you through both – free. Request a quote here.
