Shared-Appreciation Mortgage - SAM


DEFINITION of '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.

BREAKING DOWN 'Shared-Appreciation Mortgage - SAM'

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.

  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Fixed Interest Rate

    An interest rate on a liability, such as a loan or mortgage, ...
  3. Appreciation

    An increase in the value of an asset over time. The increase ...
  4. Adjustable-Rate Mortgage - ARM

    A type of mortgage in which the interest rate paid on the outstanding ...
  5. Refinance

    1. When a business or person revises a payment schedule for repaying ...
  6. Encumbrance

    A claim against a property by a party that is not the owner. ...
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