In a straight partial, no. The payer’s monthly payments go to the buyer until the buyer has received the number they bought, and then they come back to you. If you need income throughout, a split-payment partial lets you sell part of each payment and keep the rest.
Why a straight partial stops your income
A straight partial, the plainest kind of partial purchase, sells the next set number of whole payments, and the lump sum you receive at closing is their price. You have been paid for those payments in advance, so they are the buyer’s to collect.
Nothing changes for your payer except the address. The same amount is due on the same day, at the same interest rate.
Illustrative example. On a note paying $1,140 a month, a 60-payment partial pays you $56,200 at closing. For the next five years the $1,140 goes to the buyer. Payment 61 onwards, 108 payments in all, comes to you.
Selling part of each payment instead
In a split-payment partial the buyer purchases a fixed part of each payment for a period and you keep the remainder. As an example of the split, on a $1,140 payment you might sell $700 of each one and go on receiving $440 a month. You raise less cash than a straight partial over the same period, because you are selling less, and in return your income never drops to zero.
A buyer that writes straight partials will not necessarily write a split one, so say early that this is what you want. When you send us your note details, tell us whether income has to continue, so that we ask buyers for the right structure.
Income under each structure
| Structure | Cash at closing | Monthly income during the partial |
|---|---|---|
| Straight partial | Largest for a given period | None |
| Split-payment partial | Smaller | The part of each payment you kept |
| Balloon partial, buyer takes the balloon | Depends on the balloon | The full monthly payment |
| Balloon partial, buyer takes the monthly payments | Depends on the payments sold | None, but the balloon stays yours |
A balloon is a large final payment due on a set date, so the last two rows apply only to a note that has one.
Covering the gap
If the note helps pay your regular bills, work out before you sign how you will cover them for the full length of a straight partial. Then ask whether a shorter partial would do, since fewer payments sold means the income returns sooner.
Check also what happens if the payer pays late, because that decides when your payments start again after the partial. Where the agreement gives the buyer a count of payments, as opposed to a period of months, missed payments mean the buyer takes longer to collect theirs and your income restarts later.
Who collects, and when money can reach you early
During the partial the payer pays either the buyer directly or a servicing company, a firm that collects payments and keeps the records for a note. A servicer is the cleaner arrangement in a split-payment partial, because it divides each payment and sends each of you your share. Ask the buyer who services the note during the partial, and whether you will be able to see the payment record while it runs.
A straight partial can still pay you before it ends if the payer sells or refinances and pays the note off in full. The payoff is then divided between you and the buyer in the way your agreement sets out, so find that clause and ask to see the method worked through with figures.
Matching the structure to your budget
If you can live without the monthly payment for a few years, a straight partial raises the most cash for the payments you give up. If you cannot, ask for a split-payment price next to it and compare the two, and if the income matters more to you than the lump sum, keeping the note is a fair answer.
Related questions
Does my payer pay a different amount during a partial?
No. The amount, the due date and the interest rate stay as they are. The payer is only told to send the payment to the buyer or to a servicing company.
Can I get paid monthly by the buyer and skip the lump sum?
That would not be a partial. A partial exchanges future payments for cash now. If you want monthly income to continue, a split-payment partial or keeping the note are the options to look at.
Who pays the property taxes and insurance while the partial runs?
The payer, as before. A partial does not change the payer's obligations under the note and the mortgage or deed of trust. Ask the buyer who will check that taxes and insurance are being kept up.