Unlock Home Equity Agreement Review (September 2024) (2024)

Unlike loans and lines of credit, home equity agreements don’t have monthly payments or interest. Instead, an investor gives you cash upfront in exchange for future equity in your house. You pay back a fixed percentage of your home value when you sell the home.

Home equity agreements (HEAs) can be a good way to tap your home equity if you have poor credit, since HEA companies tend to base the amount you receive on the equity in your home and not your credit score. But they can also end up being very expensive, especially if your home increases substantially in value.

Like any major financial decision, it’s important to do your research before moving forward. Here, we’ll discuss pros and cons, how to apply and more about Unlock’s home equity agreement.

Unlock home equity agreements may be one of few options for borrowers who can’t qualify for more traditional home equity products. But while you can tap your home’s equity with relative ease and efficiency, don’t overlook the potentially major cost down the line — up to 70% of your home’s future equity.

While Unlock doesn’t charge prepayment penalties, its origination fee of 4.9% is higher than some competitors. And you can potentially get even more cash from other companies offering home equity agreements.

Regardless of Unlock’s strengths, its home equity agreement is only available in 14 states. Meanwhile, Unison, a competitor, offers home equity agreements in 29 states and Washington, D.C.

>> Related: Learn more about the best home equity lenders

Unlock Home Equity Agreements can give you a quick way to access cash but not without risk. Consider the following advantages and disadvantages before starting an application.

There are a few basic requirements for getting an Unlock home equity agreement, including living in a state where they’re available and having a property that meets Unlock’s eligibility standards. Beyond that, an Unlock home equity agreement is best for homeowners who need quick access to cash but don’t want to deal with monthly payments or interest. In other words, homeowners who don’t want a loan — or can’t qualify for one — may prefer a home equity agreement.

Homeowners without excellent credit, proof of income or who are self-employed may benefit from Unlock’s home equity agreement because many other lenders may not approve them. With Unlock, there are also no age restrictions, as there commonly are with a reverse mortgage.

On the other hand, Unlock home equity agreements aren’t available to everyone, namely those who live in ineligible states or who have what Unlock considers “unacceptable” liens on their home. Additionally, home equity agreements may not appeal to borrowers who think their home will appreciate significantly and don’t want to give up a significant portion of their home’s future value.

>> Related: Learn more about how a home equity loan works

You can apply for an Unlock home equity agreement online in about 15 minutes, but the entire approval and funding process can take up to 60 days. The process works as follows.

Application Process

If you’re eligible, Unlock allows you to access between 5% and 35% of your home’s equity, or generally up to $500,000. The amount of cash you get from Unlock is called the Investment Payment. Before beginning the formal application process, you can go online to get a quick estimate of your maximum Investment Payment.

If you want to move forward — with your estimate in mind — you’ll need to make an online account to complete the application. Be prepared to provide basic information about your home and finances. You’ll also need to supply the following documentation:

• Government-issued ID
• Homeowners insurance declaration page(s)
• Mortgage statement(s)
• Lease agreements or proof of rental income (if applicable)
• Trust documents (if applicable)

This process takes about 15 minutes. After completing the application, Unlock will review it and, upon approval, follow up with a preliminary offer.

Approval and Funding

After you receive your preliminary offer, you’ll schedule a call with an Unlock rep to review the offer and ask any questions you may have. If you decide to move forward, Unlock will set up a home appraisal and inspection. Following these steps, assuming everything meets Unlock’s eligibility requirements, you’ll receive a final closing statement for you to sign.

The approval and funding process can take 30 to 60 days but ultimately depends on how long the appraisal and inspection takes. To ensure the quickest possible process, make sure you’re organized with all of the necessary documentation before beginning your application. To further usher things along, come to your scheduled call prepared with any questions you want answered.

>> Related: Learn more about why home equity matters

In general, customers seem to be mostly satisfied with Unlock’s home equity agreement. Many customers cite thorough and pleasant communication throughout the application and funding processes, with a few exceptions. Customers also say the process is smooth as long as you have the necessary documentation on hand. While some customers said the process was lengthy, others said it was quicker than expected.

To get a better sense of the customer experience, check out the following reviews:

The process was so smooth and much quicker than a bank. I was told I would receive my funds in 30 days, but they arrived a week earlier. I would definitely recommend Unlock, in fact I actually did earlier today!”

— Karla F., 09/2023, Better Business Bureau

“I had never heard of this alternative to a home equity loan. Before the process started, an agent described what Unlock Technologies was and sent me a PDF that described it even more thoroughly.

I had to take the initiative to do my own research, and in the end I decided that it would be a safe jump (rather than a blind leap). All of the agents involved in this process were professional and friendly. I didn’t feel like I was being talked down to or taken advantage of.

I think this is a wonderful and safe alternative to a more traditional home equity loan, but as with all financial situations, I always advise, ‘Buyer Beware’ and practice your own due diligence.”

— Barbara D., 09/2023, Trustpilot

While you don’t need fantastic credit or a specific income to qualify for an Unlock home equity agreement, there are certain eligibility requirements to be aware of.

Geographical Location

Unlock home equity agreements are only available in a limited number of states:

Property Type

Depending on your property type, you may or may not be eligible for an Unlock home equity agreement. Unlock invests in most owner-occupied and non-owner-occupied residential real estate but does not invest in the following:

• Tenancies in Common (TICs)
• Co-ops
• Raw land
• Prefabricated homes (e.g., mobile homes)

Credit Score and Financial History

To be eligible for a home equity agreement with Unlock, you need a credit score of at least 500. Compared to typical requirements for getting other home equity products, Unlock’s requirement is quite lenient.

Additionally, your credit report can’t show any bankruptcy, foreclosure action, short sale or deed in lieu within the previous five years. Further, you can’t have any 90-day delinquencies on a mortgage within the past 24 months or 120-day delinquencies within the past 36 months.

Home Equity and LTV Ratio

Unlock has a maximum loan-to-value (LTV) ratio of 80%. There’s no specific amount of home equity needed to qualify for an Unlock home equity agreement, but Unlock’s website declares you should have “sufficient equity” — typically around 40%. The more equity you have in your home, the more cash you can get from Unlock.

However, customers should be aware of the Total Home Finance Limit, which protects your equity stake by limiting the total amount of financing that’s secured by your home. Typically, the limit caps out at 85% for a primary residence and 80% for a secondary residence or rental property. The limit includes your mortgage balance, any undrawn credit lines secured by your home and the value of your Unlock Share.

If your LTV is too high or you don’t have enough equity in your home, the best thing you can do is continue paying down your mortgage’s principal.

>> Related: Learn more about the requirements for a home equity loan

Unlock’s home equity agreement doesn’t have the same monthly payments, fees and penalties that other home equity products do, but there are a few costs to look out for.

Origination Fee and Closing Costs

Unlock charges an origination fee at closing equal to 4.9% of the Investment Payment. As is common with other types of home equity products, you may have to pay third parties for other closing costs associated with home appraisal and inspection.

Administration Fees

You may also be responsible for paying administration fees during your home equity agreement’s term for various reasons, including title changes, missed payments, a property sale and more. These fees vary by type.

Early Repayment Penalties

Unlock doesn’t impose any early repayment penalties. This means you can end your home equity agreement at any point by buying Unlock out or selling your home. You can also request a partial buyout as many times as you like during your term. While there may be administrative fees associated with necessary appraisals and inspections when you fully or partially buy out Unlock, there aren’t additional early payment fees.

There are no interest rates, APRs or monthly payments associated with the Unlock home equity agreement. Instead, Unlock gives you cash upfront in exchange for a portion of your home’s future equity when you buy them out or sell your home.

The amount Unlock receives at the end of your home equity agreement depends on a range of factors, including how much you borrow and how much your home appreciates during the term. However, Unlock will never own more than 70% of your home’s future equity.

During the application process, an Unlock representative will walk you through how costs are calculated. But you can also use Unlock’s cost calculator to get an estimate before you apply.

Before applying for an Unlock home equity agreement, it’s worth comparing it to its competitors.

Unlock vs. PNC Bank

PNC has HELOCs, but not home equity loans or home equity agreements. With a PNC Choice HELOC, you can borrow up to 89.9% of your home’s value. The maximum line amount is $1,000,000, while cash from Unlock’s home equity agreement caps out at $500,000.

You can get a personalized rate on PNC’s website based on your property type, location and other details. PNC offers both fixed- and variable-rate options, and the option you choose will affect your interest rate. Currently, variable APR rates range from 8.34% to 14.55%.

Keep in mind that PNC’s Choice HELOC has a $50 annual fee, and there may be additional fees in relation to certain account activity.

While PNC doesn’t specify eligibility requirements upfront, the rates displayed on its website are available to “well-qualified applicants” only. Keep in mind, Unlock’s credit score minimum of 500 is relatively low compared to many other lenders, and PNC’s Choice HELOC is likely tougher to qualify for.

>> Related: Learn more about PNC Bank HELOCs

Unlock vs. Navy Federal Credit Union

You have to be a member of Navy Federal Credit Union in order to apply for one of its home equity products. Membership is limited to those with familial ties to the armed forces, Department of Defense or National Guard. On the other hand, anyone can apply for a home equity agreement with Unlock.

While Unlock offers home equity agreements, Navy Federal Credit Union offers home equity loans and HELOCs. Navy Federal’s home equity products allow you to borrow a much higher percentage of your home’s equity — up to 100%. However, both Navy Federal and Unlock have a maximum cash limit of $500,000.

Navy Federal’s home equity loan has an APR as low as 6.64%, and its HELOC has rates as low as 8.75%. And while Unlock charges a 4.9% origination fee, there are no origination fees with Navy Federal’s home equity products.

Unlock vs. Guaranteed Rate

Guaranteed Rate doesn’t offer home equity loans or agreements, but it does have HELOCs that allow you to borrow up to $400,000. You need a minimum credit score of 620 — and a maximum combined LTV ratio of 85% — to qualify for a Guaranteed Rate HELOC. Meanwhile, you may be able to qualify for an Unlock home equity agreement with a credit score of 500.

Like Unlock home equity agreements, Guaranteed Rate HELOCs have origination fees, but they work a bit differently. If you choose to pay a portion of the origination fee upfront, you’ll earn a reduced interest rate on your HELOC. Depending on how you handle the origination fee, interest rates on Guaranteed Rate’s HELOCs range from 9.40% to 17.25%.

Unlock home equity agreements aren’t for everyone, but they may be a good option for some borrowers — specifically those struggling to tap into their home equity with more traditional forms of financing. With Unlock’s home equity agreement, you won’t have monthly payments or interest rates to worry about, but you will have to pay origination fees, closing costs and the “Unlock Share” of your home’s future equity.

Since Unlock is a relatively new company and home equity agreements are less common than other home equity products, do your research and get a full understanding of costs before moving forward.

Our team put together a comprehensive 100-point rating system to evaluate lenders that offer home equity lines of credit, with criteria based on factors that are most important to potential borrowers. Since Unlock is not a traditional loan, it doesn’t fit neatly into these categories. However, we used them as a baseline for comparison since most people will consider Unlock against more conventional home equity loan products.

Our rating system takes into account four broad areas. Here’s a short description of each category.

• Loan features (35%): This category measures how friendly each HELOC company’s loan terms are to potential borrowers. The most points go to lenders with a wide range of loan amounts, solid fixed-rate options, fast closing speeds and small minimum draws. Unlock doesn’t charge interest or require payments, so this is more difficult to compare with traditional lenders. Instead, we evaluated the net benefit to the homeowner.
• Customer experience (30%): We review each company’s application, prequalification and customer service policies and procedures to create this category score. The best companies will have simple online applications and multiple ways for customers to get their problems solved.
• Affordability (20%): We gauge how expensive each company’s loans are to pay back, taking into account fees and closing costs. The highest-scoring lenders will have low or no annual fees, origination fees and other closing costs.
• Company reputation (15%): Our team analyzes each company’s Better Business Bureau file, customer reviews and any outstanding regulatory actions. The most points will go to companies with an A+ rating with the BBB, a track record of addressing customer complaints and no active regulatory orders.

This rating system is intended to give readers a comprehensive overview of each HELOC lender. However, our top-rated companies may not be the best fit for everyone. To learn more, you can read our full HELOC rating methodology.