Do you think it’s impossible to get a home equity loan with bad credit? Have you been turned down for subprime equity loans and feel like there aren’t any more options? For homeowners with bad credit and a need to free up cash then you might want to consider another option: A home equity investment loan.
What is a Home Equity Investment Loan?

A home equity investment loan is also called a shared appreciation agreement or shared equity agreement. These types of loans or agreements include working with an investor or investment company to cash out the equity in your home in exchange for a minor ownership stake in your home.
This agreement works similar to a loan but with one major difference: There is no monthly loan payment. At the conclusion of the agreement time period agreed upon by you and the investor (usually 10-30 years if you’re working with a national investor group, as little as 3 years if you’re working with a local investing company), you pay back the investor both the equity advance you received and a percentage of the appreciation of your home value.
These types of loans are a great solution for home owners who have a lot of home equity, but due to life circumstances they have bad credit (usually no lower than 630) and need to free up cash, usually in order to take care of debts and improve their finances and credit standing. While a home equity investment loan might sound new to you, they’ve actually been around for awhile and you don’t need to worry about the investor taking stake in your home, the stakes are purely financial, they cannot live in your home, lease it out or sell it.
How a Home Equity Investment Loan Works

So let’s break it down from the beginning
- Locate a national or local investor group to work with for a shared equity agreement.
- Go through the qualification process and work out an agreement with the investor, setting terms and amounts and the percentage of stake the investor will take in your properties potential appreciation.
- The investment company gives you the cash amount of equity agreed upon in the contract.
- Over the course of the contract you make no monthly payments. During this time the investor has a lien against your property just like a regular loan.
- At the end of the terms you pay back the equity you borrowed from the investor plus the share of the homes appreciation agreed upon at the beginning.
Without making monthly payments these loans are something you need to plan for from the very beginning. At the deadline you owe the entire amount of the original loan and a percentage of your homes appreciation which you should gauge and plan for as well so it’s not a big surprise.
What if My Home Doesn’t Appreciate?
If your home hasn’t appreciated in value by the time the loan is due you may still owe money to the investment company over the amount you initially borrowed. When getting your home appraised at the beginning of the process sometimes these large investment companies will determine a risk-adjusted appraisal — meaning, if your home appraises for $300,000 then they may start the contract at a risk-adjusted value of $275,000. Investors do this risk-adjusted value to hedge the risk they are taking by planning on your homes appreciation. This also allows investors to calculate for home depreciation.
Working With a Local Investor: Gary Buys Houses

If the terms set by a national investment group still make you feel uncomfortable — that unknown payment amount in 10-30 years can be hard to plan for — then consider working with a local, trusted investor. Gary with Gary Buys Houses is an investor in Utah with a trusted record of helping people and finding real estate solutions. Unlike the national companies, Gary sets much shorter terms with a maximum of 3 years out. He also doesn’t set a fee based on your home appreciation, he sets a flat fee from the very beginning.
Paying back a flat fee is much easier to plan for and brings greater peace of mind about the home equity loan — you know exactly how much money to save and pay back at the end of the term. Gary is also willing to work with any credit score as long as you can show that you can improve your credit score. Not just that but Gary will work with you to improve your credit score. Rather than taking a lien on the property and giving a home equity loan, you and Gary would sign a seller finance agreement.
With a seller finance arrangement Gary owns title on your home (with the agreement not to sell your home or move into your home) but you still hold the mortgage. At the end of the 3 years you would either refinance to purchase your home back from Gary, or sell the home to cash out. So if you’re dealing with bad credit and a tough financial situation then don’t get discouraged if you don’t qualify for a HELOC. Home equity investment loans can be the perfect solution for you to pay off debts, remain in your home and improve your credit score. Contact Gary today about freeing up cash in your home today.
National Home Equity Investment Companies vs Gary Buys Houses
National Home Equity Investment Loan Companies | Gary Buys Houses |
Set terms of 10-30 years | Sets terms up to 3 years |
Usually requires credit scores of higher than 640 | Willing to work with any credit score as long as you work on improving your credit |
Loan agreement with a lien on the property | Short term seller finance |
At the end of term you owe the loan amount + an appreciation percentage | At the end of the term you owe a flat fee |
Works with you to improve your credit score | |