What is Subject To Financing?
Subject To is a creative financing strategy where you purchase a property subject to the existing mortgage staying in place. The seller transfers the deed to you but the loan remains in their name. You make the mortgage payments going forward.
Formula
Your Cost = Purchase Price - Existing Loan Balance = Equity You Pay For
Good
Taking over a loan with a rate below current market rates
Great
Assuming a 3-4% mortgage in a 7% rate environment
Watch For
The lender can technically call the loan due (due-on-sale clause) though this rarely happens
Frequently Asked Questions
What is a good Subject To for rental property?
A good Subject To is Taking over a loan with a rate below current market rates. A great Subject To is Assuming a 3-4% mortgage in a 7% rate environment. Be cautious if The lender can technically call the loan due (due-on-sale clause) though this rarely happens.
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