A participation mortgage or participating financing is a type of home loan that allows investors to team up with other investors and/or lenders to share the money or income they earn from renting or selling the investment property that is mortgaged.
Equity contribution agreements are made between the involved parties, borrowers, and lenders or different lenders.
You can use this type of mortgage to finance the purchase of commercial property or any other property you want to rent, such as storage houses or office space.
This type of loan is also known as a participating mortgage agreement and it allows participants to reduce their risk while increasing their purchasing power.
It is very common for this type of loan to come with low-interest rates, especially if several lenders are involved in the agreement.
Participation loans are very common in commercial real estate transactions.
Lenders involved in this type of loan are usually non-traditional, such as a businessman who wants to invest in real estate but does not want to deal directly with the maintenance and development of the property that is generating income.
Ideally suited for large and complex transactions between real estate investors, participating mortgages can also be set up by friends and family buying an investment property, corporate entities buying commercial real estate, and crowd-funding investment groups.