The Best Shared Equity Alternatives to a Home Equity Loan | December 2023

Home equity investments, also known as shared equity agreements, are a debt-free alternative to home equity loans. Here is our list of the best shared equity agreements available.

Shared equity agreements allow you to unlock your home equity without charging interest or monthly payments. They are also easier to qualify for than traditional home equity products, such as home equity loans and HELOCs. See how much you could get today for a share of your home's future appreciation.

We recommend you apply with the following companies and see which one offers the best terms. It is free and won't hurt your credit.

How do home equity loans compare to shared equity agreements?

Home equity loans and home equity lines of credit are traditional financing products that charge an interest rate on loan proceeds secured against your home equity. They are excellent options if you can qualify for low interest rates and have a low debt-to-income ratio. On the other hand, a shared equity alternative may be a better alternative for tapping into your home equity if you want to protect your personal cash-flow, have a high debt-to-income ratio, or you can't afford additional monthly payments.

Shared equity agreements, sometimes known as home equity investments, allow homeowners to cash out on their equity without getting into debt. It works like this. Investors give homeowners a lump sum in exchange for a share in the future value of their homes. When the homes are sold (or when the contract term ends), the investors receive their share from the sale. If the value of the house increases, so does the amount the investor receives. If the house drops in value, the investor also shares in the loss.

Home equity investments are not technically loans. They won't increase your debt, don't charge interest and there aren't any monthly payments to worry about. Usually, it is easier to qualify for shared equity agreement than a home equity loan. To illustrate, you can be eligible for a shared equity agreement even if you have a high debt-to-income ratio. Home equity loans usually require a debt-to-income ratio that is lower than 43%.

A shared equity agreement can be a good option if you:

  • need cash but don't want a monthly payment
  • have high-interest debt to pay off
  • need to finance a home improvement or want to start a business

Shared equity agreements are an attractive product for homeowners who want to avoid additional monthly payments and have an immediate need for cash. However, they do require substantial equity, usually 25% or more, and may not be a good option if you want to stay in your home for longer than the term of the agreement.

What are the pros and cons of shared equity agreements?

Home equity loans and shared equity agreements have their advantages and drawbacks. The best choice for you will depend on what your financial circumstances and objectives are. Here is a list of the pros and cons to keep in mind if you're considering a shared equity agreement as an alternative to a home equity loan.


Here is a list of the benefits and the drawbacks of shared equity contracts.

  • Access your home equity without getting into debt.
  • No monthly payments or interest charges.
  • If your property loses value, so does the amount you have to repay.
  • You can pay off high-interest debt.
  • You don't need good credit.
  • Even homeowners with a high loan-to-value-ratio can qualify.
  • You typically need a minimum of 25% equity in your home.
  • Reduces your profit when you sell your house if its value increases.
  • You may have to sell the house to repay the investment.

How do I get started?

If you think a home equity investment may be a good choice for you, get quotes from all the home equity investors listed above.

It only takes a couple of minutes to find out if you prequalify and discover how much you can get for a share in your home's equity. There are no strings attached, and it won't hurt your credit score. You may be surprised by how well they compare to home equity loans and other traditional home equity financing options.

I am looking for a home equity loan, where can I get one?

A home equity loan or a home equity line of credit (HELOC) can be a great option for people who have good credit and a low debt-to-income ratio. These lenders provide competitive rates and terms.

Sale-leaseback agreements

Another option if you want to access all your equity at once is to sell your home. The problem with this is you have to move, which is not feasible or desireable for many homeowners. In such cases, a sale-leaseback agreement may be a good fit.

What is a sale-leaseback agreement?

A sale-leaseback agreement, often just referred to as a "sale-leaseback", is a financial transaction in which a homeowner sells their property to an investor or company and then immediately leases it back. This allows the homeowner to access the equity they've built up in their home without moving out or taking on a traditional mortgage. Instead, they continue living in the home, paying rent to the new owner.

How sale-leaseback agreements work

In a typical sale-leaseback agreement, the property is sold at its current market value. The terms of the lease, including the duration and monthly rent amount, are agreed upon at the outset. The lease often resembles a standard rental agreement, but it's essential to carefully review any terms related to rent increases, lease renewals, and potential buy-back options.

Is a sale-leaseback right for you?

Deciding on a sale-leaseback requires careful consideration. Homeowners should weigh the immediate financial benefits against the long-term implications of becoming a tenant in what used to be their property. It's also crucial to work with a trusted legal professional to ensure the agreement is fair and transparent.


Here is a list of the benefits and the drawbacks to consider with Sale-Leaseback Agreements.

  • Liquidity boost without a loan
  • Stay in your home
  • Potential buy-back flexibility
  • You no longer own your home
  • Rent can become more expensive over time
  • Miss out on future equity growth
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