A shared appreciation mortgage usually has an interest rate below current market rates.

Question

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The shared appreciation mortgage provides the lender with a hedge against inflation, because he directly participates in any increase in value associated with the property being mortgaged. The lender may enjoy as much as 30-40% of the appreciation in value over a specified time period, such as 10 years. The lender may take his return from the selling of the property or from the refinancing of the appreciated property value with a new lender. In return for this appreciation-potential privilege, the lender may advance funds at well below current market rates (perhaps at three-fourths of current rates). The shared appreciation mortgage is not yet legal in all states.

A Shared Appreciation Mortgage Usually Has an Interest Rate Below