Unlock overview

Unlock (Unlock Technologies) is a New York-based company that invests in home equity, not a home equity lender offering credit lines or loans. It currently operates in 15 states, including California, Colorado, Florida and North Carolina. Its so-called home equity agreement (what it dubs an “HEA”) is similar to a reverse mortgage: You’ll get a lump-sum payout, based on your level of equity, that you won’t need to repay until you sell your home. The key difference is, when you do sell, you’ll owe Unlock a percentage of your home’s appreciated value. You might get 10 percent of your home’s equity now, for example — to do with what you wish — in exchange for giving Unlock a 20 percent share in the future. Unlock also allows you to buy back the company’s stake in your home over time.

Unlock snapshot

• Home equity loan types: Home equity agreement (HEA)
• Loan amounts: $30,000-$500,000
• Credit score minimum: 500
• Repayment terms: Up to 10 years
• Average time to approval: Undisclosed

How Bankrate rates Unlock

Methodology

To create our Bankrate Scores, we evaluated lenders based on availability, affordability and customer experience. Availability was assessed based on the minimum loan amount required, time to approval, days to close, minimum draw requirements, minimum credit score requirements and loan types offered. Affordability was assessed based on minimum APR, discounts and promotions offered and associated fees. Customer experience was assessed based on online application and account availability, customer support, auto payment availability and mobile app availability and ratings.

Benefits

• Unlock offers cash in hand now, with no monthly payments or interest, eliminating the pressure to repay right away.
• Unlock accepts a credit score as low as 500, provided you meet other eligibility criteria.

Drawbacks

• Unless you buy back Unlock’s equity, you’ll get less from your home when you sell.
• The company only operates in some states (as of this review).

Types of fees charged

Unlock charges an origination fee of 4.9 percent of the lump sum. You’ll also be responsible for any fees related to third-party services, such as a home appraisal — Unlock estimates these to total approximately $2,000. If you refinance your first mortgage or obtain another loan on your home, the company might charge you an administration fee and any recording fees.

Home equity products offered

Unlock offers home equity agreements (HEAs), rather than a line of credit (HELOC) or loan. Essentially, the company gives you money — called an investment payment — in exchange for a portion of your home’s equity up to 10 years in the future. You can buy out the company’s share in your home at any time during this term, or choose to sell your home at any time, at which point you’ll pay the company what you owe. Unlike a HELOC or equity loan, you won’t have to worry about monthly payments or interest during the term.

How to qualify for a home equity agreement with Unlock

The basic requirements for an Unlock investment are: the equity has to be tied to your primary residence; and you’ll need a FICO credit score of at least 500, along with a loan-to-value (LTV) ratio of 80 percent. (Don’t let the term “loan-to-value” mislead you  —  the home equity agreement isn’t a loan in the traditional sense.) You’ll also need to be taking out at least $30,000.

To qualify, you don’t need to be a certain age or earn a certain income,, but your debt-to-income (DTI) ratio can’t exceed 45 percent. You also can’t have a bankruptcy, foreclosure (including deed-in-lieu) or short sale on your record within the past five years, nor more than three months of missed mortgage payments within the past two (or more than four months of missed payments within the past three).

In addition, if you have other liens on the property, you might be required to clear these (pay them) before Unlock makes an investment. You’ll also need to continue paying your homeowners insurance and property taxes, as well as paying your first mortgage if you have one.

How to get started

You can get the process started on Unlock’s website, which allows you to enter some basic information about your home, or by calling 800-560-3450.