Best Shared Equity Loans

Shared equity loans — aka shared equity mortgages — are a home equity financing product that allows you to sell a percentage of your property’s future appreciation in exchange for a lump sum. Typically, the money is used to pay a larger down payment on a home. Shared equity loans made a brief comeback during the great recession, but are now extremely rare. However, there are similar financing products, such as shared equity agreements or shared equity investments, that are widely available.

Common Questions

See some common questions and answers below
What is a shared equity loan?
Shared equity mortgages, another term for shared equity loans, are a financing product that allow you to put a deposit or down payment on a home without getting into more debt.
How do shared equity loans work?
There are several models, but this is how they typically work. The homeowner sells a percentage of the future home equity to a lender in exchange for a lump sum of cash. When the loan’s term ends (or when you sell the property) you give the lender their percentage of the home’s appreciation in value. If the house didn’t increase in value, you don’t owe anything.

It’s important to note that there are different types of shared equity loans with varying terms and conditions. So, there isn’t a one-size-fits-all answer to this question. Some shared equity loans require you to pay back the principal of the loan regardless of whether the property increases in value or not. In this way, they are like a shared equity agreement or home equity investment. If you are looking for a home equity investment, the list of best HEIs above is a great place to start.

Where can you find shared equity loans?
Shared equity loans are very hard to find in the United States. However, a similar model is used by home equity investors and shared equity agreement companies. Some of these investors offer down payment assistance loans, which borrowers can use to put down a bigger down payment and avoid expensive fees, such as private mortgage insurance (PMI).

This financing method is also used by family members who want to help with a down payment in exchange for a percentage of the profits when the house is sold.

In some cases, mortgage lenders provide both traditional mortgages and shared-equity loans. But this is extremely rare in the United States. Nevertheless, there are some non-profit agencies and municipal governments that use the shared equity model to provide down payment assistance loans. This can help borrowers avoid expensive fees, such as private mortgage insurance (PMI).