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Substitution Of Collateral Cost Calculator

Substitution swaps collateral at cost.

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Total substitution cost

$240,000

Fees + legal

$120,000

Cost % of new asset

0.02%

How the math works

Total = fees + legal + reserve.

$85k + $35k + $120k = $240k total. 2% of new asset value.

How to Use

  1. Enter new asset value.
  2. Enter lender approval fee.
  3. Enter legal cost.
  4. Enter new asset reserve requirement.
  5. Read total substitution cost.

Frequently Asked Questions

When used?

Sale of specific property while maintaining loan. Replacement asset meets lender standards. Common in portfolio loans, cross-collateralized structures. Allows strategic flexibility without full refinance.

Cost components?

Lender approval fee: 0.5-1.5% of reallocated balance. Legal: $15-50k. New appraisal: $5-15k. New survey: $3-8k. Lender counsel: $8-25k. New property insurance binder. Total: 1-3% of reallocated balance.

Approval?

Lender standards apply: LTV, DSCR, debt yield, occupancy, tenant quality. Replacement asset must meet or exceed released asset on all metrics. Often negotiated in advance; not all lenders accept.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.

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