Which type of mortgage involves lenders participating in the profits from a property?

A shared equity mortgage is a financial arrangement where lenders invest in a property in exchange for a stake in its future appreciation. This means that, in addition to receiving regular mortgage payments, the lender also shares in the profits when the homeowner sells the property or when its market value increases significantly.

This arrangement can benefit both parties; the homeowner may have easier access to financing, potentially lower payments, or receive cash to help with the purchase. At the same time, the lender has the potential to earn a return based on the property’s value, aligning their interests with those of the homeowner.

The other types of mortgages listed do not include this profit-sharing element. A subprime mortgage typically refers to loans made to borrowers with poor credit histories and does not involve profit-sharing. A conventional mortgage is a standard loan with fixed or adjustable rates, without any shared equity feature. A reverse mortgage is primarily for older homeowners, allowing them to convert part of their home equity into cash, but it does not involve participation in property profits.