Which type of mortgage allows a borrower to benefit from property appreciation at the sale?

A shared equity mortgage is designed to allow borrowers to share in the appreciation of their property when it is sold. In this type of mortgage arrangement, the lender or investor provides financing in exchange for a percentage of any increase in the property’s value over time. When the property is sold, both the borrower and the lender benefit from this appreciation, which can be a significant advantage as property values rise.

This kind of mortgage is particularly attractive for those who may not have sufficient income to qualify for a traditional mortgage but still want to invest in real estate. It creates a partnership of sorts, where both parties have a vested interest in the property’s value, promoting collaboration between the borrower and the lender.

In contrast, the other options mentioned do not inherently provide this appreciation benefit. A buydown mortgage involves lowering the interest rate temporarily, a reverse annuity mortgage allows homeowners to convert equity into cash without selling, and a sale and leaseback arrangement is a financing method used by businesses to free up capital while still maintaining possession of the property. None of these alternatives offer the same direct benefit of sharing property appreciation as found in a shared equity mortgage.