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Best Shared Equity Alternatives to Home Improvement Financing | December 2022

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

Are you thinking about getting a loan to finance your renovation project? If so, consider getting a quote for a shared equity agreement before you make a decision.

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 investors and see which one offers the best terms. It is free to apply and won't hurt your credit.

Can I take equity out of my house for home improvements?

Yes, absolutely. It often makes sense to finance your home improvement projects by tapping into your home equity. After all, remodeling your home will typically increase your home’s value, which will help you build more equity.

The problem is many homeowners don't qualify for home equity financing because they either don't have great credit or don't meet the debt-to-income requirements of lenders. Shared equity financing is an alternative source of home equity financing that allows you to unlock your home equity in exchange for a share in your home's future appreciation.

Shared equity agreements are an attractive option for people who either don't qualify for traditional home equity financing or want to tap into their home equity without getting into debt.

How does a shared equity agreement work for home improvements?

Shared equity agreements give homeowners the option of cashing out on their equity without getting further into debt. Here is how it works.

An investor gives you a lump sum in exchange for a share in the future value of your home. When you sell your home (or when the contract term ends), the investor gets a share of the sale. When home prices increase, the investor also wins. However, if your home drops in value, the investor will also share in the loss.

What is the best way to finance home improvements?

Saving and paying for cash is usually the best way, but that is not always possible. Often homeowners require some financing. If you have excellent credit and enough cash flow, getting a home equity line of credit or a home improvement personal loan can provide the lowest rates and fastest funding.

However, shared equity agreements can be a good option if your credit is not perfect or an extra monthly payment doesn't fit in your budget.

What are the pros and cons of shared equity agreements?

Financing home repairs with shared equity financing is a good option for many homeowners, but it's not for everyone. As with all financing products, shared equity agreements have their pros and cons. The best option for you will depend on your goals and financial circumstances.

WEIGH THE RISKS AND BENEFITS

Here is a list of the benefits and the drawbacks of financing home improvements with shared equity agreements.

Pros
  • 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 finance larger home remodels.
  • You don't need good credit.
  • Even homeowners with a high loan-to-value-ratio can qualify.
Cons
  • 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 shared equity agreement may be a good option for you, fill out a free application form with all the equity investors listed above. It will only take a few minutes to see if you prequalify and to discover which investors offer the best terms. There are no strings attached, and it won't hurt your credit score.

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

Personal loans for home improvement projects are a hassle-free way to fund renovations or repairs to your biggest asset. If you don't want to tap into your home equity or pile on credit card debt, a home improvement loan can be an excellent option.

Here's SuperMoney's list of the top personal loans for home improvement.

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SuperMoney
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