Shared-Equity Mortgage (SEM)

Home loan in which the lender is granted a share of the equity, thereby allowing the lender to participate in the proceeds from resale.

A home Loan in which the lender is granted a share of the Equity thereby allowing the lender to participate in the proceeds from resale. After satisfying the unpaid balance of the loan, the borrower splits the residue of the proceeds with the lender. Shared equity plans often require the lender to buy a portion of the equity by providing a portion of the Down Payment.
Example: Ingram obtains a shared equity mortgage from a Mortgage Banker. The lender provides one half of the necessary down payment. Ingram makes loan payments on a fixed-rate, level payment basis. At resale, Ingram and the lender split the proceeds after repayment of the balance of the loan.