Assume that you are receiving monthly payments on a $250,000 mortgage. You have been receiving those payments for the past two years and the current outstanding balance is $240,000. You would otherwise be content to continue receiving those payments for the duration of the mortgage, but you need to raise $30,000 to pay for your child’s last year of college. Since you only need $30,000, it might not make sense to sell the entire mortgage. Instead, it might make sense to sell only as much as you need to in order to raise the $30,000.

There are two popular ways to sell part of your mortgage. The first way is to sell a certain number of monthly payments. For example, CEG could buy the next 25 or 50 or 100 monthly payments. In this instance, CEG would give you a lump sum of cash for the right to receive those payments. At the end of that time, the payments would revert back to you. You could then choose to continue collecting those payments, or you could sell more of the payments to CEG.

The other popular way to sell part of your mortgage is to sell part of each monthly payment. For example, assume that the mortgage is paying you $1,500 per month. You could sell $250 or $500 or $750 of each monthly payment for a certain period of time. This method is popular for those who have a cash need but still need to collect some money each month from the mortgage.