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Unlock Review
Unlock Review | Best Mortgage Lenders
Unlock Review
Unlock Review | Best Mortgage Lenders
November 14, 2021 / Nadav Shemer
Unlock Review
Unlock Review | Best Mortgage Lenders
November 14, 2021 / Nadav Shemer
At a Glance
Unlock is a real estate investor. It pays you, in cash, for the right to share in the proceeds from the future sale of your home. As an alternative to home equity loan providers, Unlock doesn’t charge any interest and therefore doesn’t require monthly payments. However, like a home equity loan provider, it does check your credit score and LTV ratio and it does charge an origination fee for its services. Unlock currently operates in 11 states, and may add more states in future.
Key Figures
Loan types: Home equity
Loan products: Investment (alternative to home equity loan)
APRs start from: N/A
Minimum credit score: 500
Repayment terms: N/A
Pros
No monthly payments
Low credit requirement
No income requirement
Cons
Expensive for large cash amounts
Only available in 11 states (as of Nov. 2021)
The best thing about Unlock is that it’s not a loan. As a result, there is no interest, no monthly payments, no income requirement, and (almost) no credit requirement. Well, there is a minimum credit score, but it’s 500 – much lower than the minimum 620 required for a regular home equity loan. Because Unlock doesn’t charge interest, you are at no risk of having your home taken from you due to failure to make payments. (However, if you have a mortgage, you must continue to make mortgage payments as well as property taxes, property insurance, and any other housing obligations. Getting funded by Unlock doesn’t release you from obligations to other parties.)
The flipside to Unlock’s funding model is that you may be giving up a large amount of money in future. The higher the amount, the larger the discrepancy – and you may end up paying a lot more to Unlock upon the sale of your home than Unlock paid you when you first got funded.
How It Works
Unlock invests in most residential real estate (single family, condominiums, 2-4 unit properties, and townhomes) including both owner and non-owned occupied properties. It currently operates in California, Colorado, Florida, Michigan, Nevada, New Jersey, North Carolina, Oregon, Utah, Virginia, and Washington state.
The minimum credit score is 500. The maximum LTV is 80% (i.e. your current mortgage debt must not be higher than 80% of your current appraised property value). In most cases, there is no income requirement.
It only takes one minute to find out how much you can borrow and how much it will cost you.
To get started, enter:
  • Your address
  • Property type (e.g. single family, condo townhouse)
  • Property usage (e.g. principal residence, secondary home, investment)
  • How much you owe on the property
  • Your estimated credit score
  • N.B. Your estimated property value will come up automatically
After hitting enter, you’ll immediately see how much cash you can ‘unlock’ and the share of your home’s future value you need to give Unlock in return. The first thing you’ll see is the maximum cash amount you qualify for. To see details for smaller cash amounts, simply use the ▼ button. If you find a deal you’re happy with, hit the ‘Book Call’ button at the bottom of the screen to book a date and time for a free 15-minute consultation.
Types of Loans
Unlock is a real estate investor, not a lender. The way Unlock works is that it pays you, in cash, for the right to share in the proceeds from the future sale of your home.
Funding amounts range from $30,000 to $500,000, although you’ll need to have around $1 million to qualify for the maximum amount.
In a typical transaction, you would get approximately 4% of your home’s current appraised value in exchange for giving Unlock an approximately 7% share of your future value, approximately 20% of your current value in exchange for an approximately 31% share of your future value, approximately 30% of your current value in exchange for an approximately 43% share of your future value, and approximately 43% of your current value in exchange for an approximately 70% share of your future value.
Although Unlock isn’t a lender, it is similar to lenders in one respect – it charges an origination fee worth 3% of the funding amount. You will also need to pay any required third-party expenses to appraise, inspect, and record your Unlock transaction.
Oh, and one more thing: if you want, you can buy out Unlock’s share without selling your home (as long as more than six months have passed since the start of your Unlock contract). The amount you pay Unlock will be determined by an independent third-party appraisal that you pay for. There is no prepayment penalty for buying out Unlock’s share.
Loan Features
Unlock only offers one product – the one we described above. It doesn’t offer any other products or services.
Rates and Terms
If you’ve made it this far, you’ll know that the price for getting funded by Unlock is a share of your home’s future value, not interest. Unlock’s share is determined by the appraised value of your home. It isn’t impacted by how much you owe on your home (unless you owe more than 80% of the appraised value, in which case you won’t qualify), where you live, or your income. Your credit score has only a minimal impact on Unlock’s share, e.g., a homeowner with 500-619 credit may have to give up about another half-percentage point compared to a homeowner with 620+ credit.
The following table shows various scenarios for three homeowners: one with a $150,000 appraised home value, one with a $723,000 home value, and one with a $1.62 million home value.
As the table shows, Unlock typically receives a higher percentage of your home’s value when your home value is lower, and a lower percentage of your home’s value when your home value is higher. However, expensive houses tend to appreciate more in absolute terms than cheaper homes. Therefore, if your current home value is high, you may end up paying more to Unlock upon the sale of your home than if your current home value is low.
Current home value: You receive ($) Unlock receives (% of future value)
$150,000 3.201% 30.89%
$67,987 70%
$723,000 $30,000 6.64%
$208,000 46.04%
$316,225 70%
$1.62 million $100,000 9.86%
$300,000 29.59%%
$500,000 49.31%
*Last updated November 7, 2021
Summary
Unlock provides an interesting alternative to a home equity loan or home equity line of credit (HELOC). If you own your own home but can’t afford or don’t want the risk of monthly payments, then Unlock is obviously a better option than a traditional home equity loan or HELOC. On the flipside, you may end up having to pay Unlock a large amount in future. Whether or not Unlock makes sense for you depends on your financial situation, so make sure to look carefully at the numbers before making a decision.
Contact Unlock
Unlock is based in San Francisco. To speak with an Unlock consultant, fill out the short form on the Unlock website and then schedule a time and date to have someone call you back. If you have a question that needs answering now, then you can try your luck by emailing hello@unlock.com.
By Nadav Shemer
Nadav Shemer specializes in business, tech, and energy, with a background in financial journalism, hi-tech and startups. Nadav writes for bestonlinemortgageloan.com. He enjoys writing about the latest innovations in financial services and products.
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