Finance category
Mortgage, loan, investing, tax, and money calculators.
Loan Sale Premium Calculator
When loans trade above par (>100 cents), the originator captures premium. This calculator sizes the gain and annualized yield.
Premium gain (over par)
$125,000
Gross sale proceeds
$5,125,000
Net after origination cost
$90,000
Gain as % of face
2.50%
How the math works
Loan sale premium = (price − par) × face. $5M loan at 102.5 = $125k gain. Subtract origination cost for net.
Originators with strong rate forecasting buy loans below par in rising-rate markets and sell them above par when rates drop. Timing matters.
How to Use
- Enter loan face amount.
- Enter sale price %.
- Enter origination cost.
- Read premium gained.
Frequently Asked Questions
When do loans trade above par?
Performing loans with high note rates in low-rate markets. The fixed rate becomes valuable. Also: agency loans, conforming credit loans in investor demand.
Typical premium?
1-5 points (100-500bps) above par in hot markets. Some agency MBS trade at 104-106 when rates drop significantly. Distressed loans trade at 60-90% of par.
Why sell?
Capture gain-on-sale. Redeploy capital to originate new loans. Reduce warehouse exposure. Liquidity management. Most non-bank lenders flip loans regularly.
How do I benchmark this?
Benchmark against industry data from NCREIF, IREM, Yardi Matrix, CoStar, or RCA. Institutional operators also benchmark internally across their own portfolio to identify operating outliers. A single number means little; the trend and the peer comparison mean everything. Run quarterly benchmarks and note deviations that exceed 10% — those warrant investigation.
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