Shared Equity Plan

The shared equity plan is great for investors and buyers alike.

Similar to the Shared Appreciation Mortgage {SAM} the Shared Equity Plan entails that the monthly costs and the downpayments are split between the buyer and a partner. That partner will either be an investor, friend, or relative. In return, for such assistance, the buyer shares any profit from the home sale with the partner.

Shared equity works by providing you, the buyer, with a loan which will form part of the deposit for the property you want to buy. Then, as you would normally, you take out a shared equity mortgage on the remaining part of the property’s value.

Under some plans, the partner is considered the landlord and the buyer is the tenant, whose share of the monthly payments is considered rent. The partner gets investor tax breaks from this set-up.

The complexities of the Shared Equity Plan and yesterdays Shared Appreciation Mortgage and the possibility of the buyer’s having to sell the home at an inconvenient time in a falling market are major drawbacks to “sharing”.

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