Unlock: 2024 Home Equity Review

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.
• You can receive up to $500,000 of the equity in your home.

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).
• In order to close, you might need to use proceeds from the home equity agreement (HEA) to pay certain pre-existing liens.

Home equity loan products offered

Unlock offers a home equity agreement (HEA) rather than a line of credit (HELOC) or loan. Essentially, the company is an investor: It pays you funds in exchange for a portion of your home’s equity, which it’ll cash in 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’s investment back. Unlike a HELOC or equity loan, you won’t have to worry about monthly payments or interest during the term.

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.

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. For scores below 550, you may have to verify your income. You will also need 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 apply with Unlock

You can start the process on Unlock’s website, where you can enter some basic information about your home. You can also reach them by phone at 800-560-3450 or by email at hello@unlock.com.

How Bankrate scored Unlock

• Methodology

  To determine a home equity lender's Bankrate Score, Bankrate rates lenders on a scale of one (1) to five (5) stars — with five (5) the highest rating — based on a variety of factors relating to the lender's products and services. To assign our ratings, we assessed each mortgage lender across three core areas:

  • Affordability: Annual percentage rate (APR) - 80%; introductory APR - 20%
  • Availability: Licensing - 50%; credit score - 20%; loan minimum - 10%; draw requirement - 10%; loan products - 10% 
  • Borrower experience: Rate transparency - 45%; convenience - 35%; customer service - 10%; fixed-rate options - 10%

  Learn more about our methodology.