What to know about Shared Appreciation Mortgages

During the late 1990’s, borrowers were told to take out Shared Appreciation Mortgages, better known as SAM, to unlock a cash sum by sharing a stake in their home, which eventually led them into unmanageable amounts of debt.

What’s a Shared Appreciation Mortgage?

By taking out a Shared Appreciation Mortgage, this would allow borrowers to take advantage of an interest-free sum of cash, typically worth 25% of the home value.

This product was sold between 1996 and 1998 by just two banks; Bank of Scotland and Barclays.

If the homeowners would then decide to sell the mortgaged property, they would be required to repay the entire loan, plus 75% of any uplift in value of the property. As the value of houses increased, rather than reaping the benefits of house price inflation, borrowers were faced with masses of debt.

Case Study

Earlier this year, This is Money shared a case study of a pensioner who took out a Shared Appreciation Mortgage.

The owner of a £200,000 house in 1998 would sign up to a SAM and be given £50,000 cash.

If that house were sold in 2014 for £600,000, the owner would be required to hand over £350,000 to redeem the mortgage.

Sale price: £600,000

– House value when SAM taken out: £200,000

– Increase in value: £400,000

– 75% of increase in value: £300,000

– Original loan: £50,000

Total repayable: £350,000 (a return for the bank of 600%)

It is argued that the contracts which locked borrowers into this arrangement were unfair and unreasonable. As a result, many borrowers are unable to move out of their homes.

How can we help?

Here at Cooper Stern, we are experts at advising individuals and businesses on mis-sold complex financial products.

If you were/are a SAM holder, you may be eligible for compensation as there could be room for negotiation with Bank of Scotland and Barclays. Get in touch by calling

01204 328 287, or use our online enquiry form.