What type of mortgage requires the borrower to share a portion of the profit upon selling the house?

A shared appreciation mortgage specifically involves an agreement where the borrower receives a loan in exchange for agreeing to share a portion of the appreciation in the property's value when it is sold. This arrangement allows lenders to benefit from the potential increase in property value, making it an attractive option in scenarios where the borrower may not be able to qualify for a traditional loan due to limited income or credit history.

In a fixed-rate mortgage, the borrower pays a set interest rate over the life of the loan, with no provision for sharing profits from property appreciation. This type of mortgage focuses solely on periodic interest and principal repayments without any profit-sharing mechanism.

A reverse mortgage allows homeowners, usually seniors, to convert part of their home equity into cash while still living in the home. It does not involve sharing appreciated value upon selling the house; rather, the loan is typically repaid through the sale of the property after the borrower moves out or passes away.

An interest-only loan permits the borrower to pay only interest for a specified period, without paying down the principal. Although it may provide short-term financial relief, it does not entail any profit-sharing agreements upon sale of the property.

Thus, the shared appreciation mortgage is the only option that requires the borrower to share a portion of the profit