Enter the unpaid balance, the note’s interest rate and the number of monthly payments left, then move the yield slider. The calculator works out the monthly payment and what a buyer asking for that yield would pay today for the payments still to come. Treat the result as an estimate, not an offer.
How the estimate works
A note buyer is buying a stream of future payments. A payment due in ten years is worth less to them than one due next month, so they work out what each payment is worth today at the return they want, called the yield, and add those amounts up. The total is the price. In finance terms it is the present value of the remaining payments.
The calculator does this in two steps:
- It works out the monthly payment from the balance, the note rate and the payments remaining, using the standard amortization formula. If your real payment is different, for example because the note has a balloon or the payer sends extra, the estimate will be off.
- It discounts every one of those payments at the buyer’s yield divided by 12, one month at a time, and adds them up.
The formula in plain words
Monthly payment: the balance times the monthly note rate, divided by one minus (one plus the monthly note rate) raised to the power of minus the number of payments.
Price: the monthly payment times one minus (one plus the monthly yield) raised to the power of minus the number of payments, all divided by the monthly yield.
The discount is the balance minus the price. When the buyer’s yield is higher than the note rate, the price comes out below the balance. When the two are equal, the price equals the balance. There is a longer walk-through in how to calculate the present value of a note.
A worked example
Illustrative numbers only: a $100,000 balance at 7% with 240 monthly payments left. The monthly payment works out to $775.30, and the 240 payments add up to about $186,072 before any discounting.
| Buyer yield | Estimated price | Discount from balance |
|---|---|---|
| 8% | $92,690 | $7,310 |
| 10% | $80,340 | $19,660 |
| 12% | $70,412 | $29,588 |
| 14% | $62,347 | $37,653 |
Six points of yield move the price by more than $30,000 on this note. That is why the yield a buyer applies matters more than almost anything else in an offer, and why it is worth knowing what yield note buyers look for before you compare prices.
What moves a real offer
The calculator knows four numbers. A buyer looks at much more, and each of these pushes the yield they ask for up or down:
- The payer: how long they have paid, whether payments arrive on time, and their credit. A long, clean record is worth real money, as seasoning and payment history explains.
- The property: its value against the balance owed, its type and its condition. The more equity behind the note, the safer it looks.
- The paperwork: the original signed note, the recorded mortgage or deed of trust, and a clean chain of assignments. Gaps here slow a deal down or lower the price.
- Lien position: a first lien is paid first if the property is sold, so it is priced at a lower yield than a second. See lien position and note value.
The slider runs from 8% to 14% so you can see how sensitive the price is. It is a range for comparison, not a reading of today’s market. A note with a thin record or a junior lien can be priced at a yield above 14%.
Balances this calculator covers
The calculator accepts balances from $10,000 to $5,000,000. Outside that range the math still works, but the buyers and terms involved are different enough that a general estimate is not much use. If your note falls outside it, contact us and we can look at it with you directly.
From an estimate to real offers
An estimate tells you roughly where a full sale might land. If you only need part of the money, the partial purchase calculator shows what selling a set number of payments could bring in while the rest come back to you.
Real offers show the balance, the buyer’s yield and the discount, so you can check them against this page. Our fee is built into the offer price, so you see one net figure rather than a price with a fee taken off later. Asking costs nothing and commits you to nothing, and keeping the note is a good outcome. When you want actual numbers, send us the details to price your note.
Related questions
Is the calculator result an offer?
No. It is an estimate based on four numbers. Real offers depend on the payer's record, the property and equity, the paperwork and the lien position, and they can land above or below this figure.
Why is the estimated price lower than my balance?
Because the buyer's yield is higher than your note's interest rate. The buyer discounts each future payment at their yield, so the total comes out below the balance. If the yield equals the note rate, the price equals the balance.
What yield should I use?
Use 10% as a middle case, then look at 8% and 14% to see the range. A first-lien note with a long, on-time record tends to sit toward the lower end; a second lien or a short record pushes the yield up.
Does the estimate include your fee?
Our fee is built into the offer price on real offers, so you see one net figure. The calculator does not show a separate fee line.