Shared-Appreciation Mortgage - SAM

A special kind of mortgage that allows the purchaser to pay a given amount of the loan balance to the lender by passing along a portion of the gain in value of the property. In return for this additional compensation, the lender agrees to charge a rate of interest on the loan that is below the prevailing market rate. Shared-appreciation mortgages allow the lender to recoup the balance of the "interest" charged when the property is sold.



Shared-appreciation mortgages allow the purchaser to deduct the amount of gain passed to the lender as interest in the year paid when the property is sold. However, this type of home loan often has a time limit on when the balance must be repaid (e.g., 10 years). If the property is not sold by the deadline, the remaining balance can usually be refinanced at the prevailing market rate.