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Shared Appreciation Mortgages

The shared appreciation mortgage was introduced in the 1990's as a new way of releasing equity. When launched, it attracted borrowers with benefit statements informing the customer that the product had 0% APR and no repayments.

The main characteristics of the shared appreciation mortgage are:-

  • The borrower is able to release a set percentage loan to value sum form the property (usually up to 25%).
  • The up front costs are met by the borrower or added to the advance - these usually comprise legal fees, a booking fee, and a valuation fee.
  • No repayments are made during the life of the borrower or until he/she sells the property
  • Instead of interest, the lender is entitled to a specific percentage of the Capital is repaid along with the share of the appreciation on the death of the borrower or the sale of the property.
  • Capital is repaid along with the share of the appreciation in the value of the property (for example, on third) between inception of the loan and the death of the borrow or sale of the property.