In a shared equity mortgage, what does the lender participate in?

In a shared equity mortgage, the lender participates in the appreciation of the property. This arrangement allows both the borrower and lender to share in the increase in property value over time. When the property appreciates, its market value rises, and both parties can benefit if the property is sold or refinanced.

The lender's involvement in the appreciation is a key characteristic of shared equity mortgages, as it is designed to lower the borrower’s initial financial burden in exchange for a portion of the future gains on the property. By sharing in the appreciation, the lender effectively invests in the property, fostering a partnership that can incentivize both parties to maintain and improve the property.

In contrast, the other options do not align with the fundamental nature of shared equity mortgages. Loan repayments are strictly the responsibility of the borrower, while property depreciation, which refers to a decrease in property value, is typically a financial risk borne by the owner. Tax benefits, often tied to property ownership expenses or mortgage interest, are generally retained by the borrower and are not shared with the lender in a shared equity arrangement.