Carryback Loans: Average Terms

Carryback loans are seller’s loans where the seller agrees finance a portion of the selling price. This type of loan, which is a second or subordinate loan, stands behind the primary loan used to purchase the home. The risk to a seller that finances a carryback loan is that if the borrower defaults on the loan, they may not receive the money that was lent.

Types of Terms for Carryback Loans

A carryback loan contains the same terms and conditions as any other loan in terms of repayment period, rate of interest and penalties for missed and late payments. These terms do not differ because the loan is a carryback loan. The only true difference with these types of loans is the subordinate position of the loan maker. If a home is foreclosed, for example, the carryback loan guarantor will only receive their money from the home’s sale after the primary mortgage holder is paid.