Can I Do Owner Financing In Alabama If I Have A Mortgage On The Property?

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Learn more about Owner Financing

Is there a home you’re trying to sell? Maybe you want to sell, and seller financing is something you’re considering. One could wonder, “Can I do owner financing in Alabama if I have a mortgage on the property?” if they already have a mortgage on their home. 

This is a common inquiry, so we thought we’d address it in this post. Read on and we’ll address that topic and offer some advice for moving forward in the blog article.

What is owner Owner Financing 

Owner financing, also known as “seller financing”, is a type of financing in which a seller provides financing for a buyer to purchase a property. In this arrangement, the seller acts as a lender, and the buyer pays a down payment and then makes monthly payments to the seller, often with interest. 

A mortgage is a loan taken out to finance the purchase of a property and is typically secured by the property itself. So can I sell a private mortgage in Alabama? Yes, you should check with the Alabama Banking Department to make sure you are complying with all applicable state and federal laws.

Can I Do Owner Financing In Alabama If I Have A Mortgage On The Property?

Under Alabama law, it is possible to do owner financing on a property that already has a mortgage. However, the mortgage lender must approve of the arrangement before it can be executed. The lender will likely require that the buyer take out a new loan to pay off the existing mortgage, so that the seller will not be responsible for any unpaid mortgage debt.

If you’re unable to sell with seller financing because of a mortgage, you have other options…

Rent To Own

An alternative that might work for you is called rent-to-own, which has some similarities (such as ongoing payment and you own the house) and some differences (there might not be a down-payment and the buyer needs to qualify for a mortgage from a bank at the end of the pre-established rental term).

If you are thinking about accepting owner financing but you still have a mortgage on your property, here’s another option for you: Get in touch with us and talk to us about your property. 

As experts in buying and selling real estate, we are aware of a number of options that you might not know about. We can walk you through those options and help you out ourselves or we can connect you with someone who can help you.

Benefits of Owner Financing

Owner financing offers several advantages for both the buyer and the seller. 

  • For buyers, the main benefit is that closing costs and the closing time are often lower than for a traditional mortgage. 
  • Additionally, it can be easier for buyers to qualify for owner financing than for a traditional mortgage.

Disadvantages of Owner Financing

Although there are several benefits to owner financing, there are also some potential drawbacks.

  •  For the seller, the biggest risk is that the buyer may default on the loan, leaving the seller with no recourse to reclaim the property. 
  • Additionally, the profit margins can be lower for owner financing than for selling the property outright.


Owner financing is a useful financing option for both buyers and sellers, as it offers several advantages over traditional mortgages. However, it is important to remember that there are some risks involved with owner financing, such as the risk of default and lower profit margins.

 Before entering into an owner financing arrangement, it is important to consider both the benefits and the potential drawbacks.

Get in touch with us today by clicking here to fill out the form or by calling us at (256) 607-4109 .

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