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Unlock

2022 review

Unlock enables you to take advantage of the equity in your home without ever having to make monthly payments or pay any interest.

7.0 / 10
Editorial Score
Andrew Koopman
Andrew Koopman
Finance Writer
January 6, 2022

Overview

A relatively new company, Unlock has been rapidly expanding to operate in more areas of the country. This California-based real estate investor offers home equity agreements, allowing you to get money out of the equity in your home without entering into a conventional loan.

With Unlock, you can receive between $30,000 and $500,000 as a percentage of your home’s value, as long as you agree to pay back a higher percentage of its future value. Since this money isn’t a loan, you never make monthly payments or pay any interest, and you can use the money for any purpose.

I tested Unlock myself to get a better understanding of what the company has to offer. From the application process to everything entailed in a home equity agreement, I’ll outline my experience below.

7.0 / 10
Editorial Score
Unlock
Quick view:
Editorial Score
7.0 / 10
Online Services
Applications, Quote management, etc.
8.0 / 10
Customer Service
1.0 / 10
Available in all states
2.8 / 10
Available loan types
0.0 / 10
Products
$30K-$300K Loan Amount
7.5 / 10

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Products & Services

Home Equity Agreement

As a home equity sharing company, Unlock is a real estate investor, as opposed to a real estate lender. Do not confuse a home equity agreement with a home equity loan or HELOC. This type of financing enables you to get cash out of your home’s equity today, but you have to give up equity in the future sale (or appraised value) of your home.

Unlike other types of financing (e.g. loans), you don’t make any payments on the home equity agreement that you enter, nor does any interest accrue on the amount that you received. In fact, you won’t owe Unlock anything (except an origination fee) until the agreed-upon future payback date or if you sell your home while the agreement is active.

Uplock’s application process is almost entirely online. I’ll go into details about it later in this review, but it mainly involves you filling out online forms with information about yourself and the property in question. You’ll also need to upload scanned versions of certain verification forms as requested.

To see what home equity agreement offers you pre-qualify for from Unlock, you’ll have to give the platform permission to perform a soft credit inquiry. This credit check is just to confirm your credit and will not affect your credit score in any way.

With a home equity agreement, you can obtain $30,000 to $500,000 worth of funding. The amount will always be a percentage of your home’s current value (based on a third-party appraisal), and the final maximum amount will be affected by:

  • Current value of the home
  • Total debt on the home
  • Creditworthiness (better credit might unlock a higher amount)
  • Property usage (owner-occupants may qualify for a higher amount)

In exchange for the money the company gives you, Unlock will receive a percentage of your home’s future value. This value is based on either a future sale price or future appraised value. With a standard offer, you receive 10% of your home’s current value now and then you will owe Unlock 16% of your home’s value at an agreed-upon point in the future.

One final thing to note is that Unlock is one of the only home equity sharing companies that offer partial buyouts. At any time during the agreement, you can buy out a portion of Unlock’s future equity. This can be advantageous to do during periods when the housing market has dropped significantly, but you’ll have to pay for an appraisal and inspection for each buyout. So it might not always be in your best interest to do multiple partial buyouts.

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Rates and Terms

Unlock doesn’t provide loans, so there are no monthly payments – and no interest rates or repayment terms. Instead, Unlock uses what it refers to as an Exchange Rate. This is the rate that determines how much you have to pay back to Unlock at the conclusion of the agreement.

For most agreements, Unlock uses a 1.6x Exchange Rate. This means that for every 10% of your home’s current value that you receive today, you would end up owing 16% (10% x 1.6) of your home’s future value to Unlock. In most cases, Unlock agreements are for ten years. At the end of this term, you’ll either need to sell your home or pay the money owed out of pocket.

According to the company’s site, the annualized cost of the home equity agreement can never exceed 18%, and it drops the longer you hold the agreement. While this may seem high if you compare it to other annual rates (like APR), remember that you do not actually have to pay any interest, nor do you pay any sort of monthly payments.

A higher credit score won’t necessarily lead to better Exchange Rates, but it may help you qualify for a higher amount. The rate stays at 1.6x in most cases, but it can change in extreme cases based on the amount of money you’re looking for and the value of your home when you enter into the agreement.

Before the end of the agreement, the only amount that you’ll owe directly is a 3% origination fee on the amount of Unlock’s investment. You’ll also need to cover the cost for any third-party expenses out of pocket, including:

  • Home appraisal fee
  • Home inspection fee
  • Transaction recording fee

Lastly, there is no prepayment penalty for buying Unlock out of the agreement early. You will be able to do so at any point after the six-month anniversary of entering into the agreement. But any buyouts – be they complete or partial – will incur the same fees to you as the ones listed above, if applicable.

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Application Process and Qualifications

I went through Unlock’s application process myself to find out what it involves. Since the company only operates in 14 states (mainly located in the western half of the country), you may quickly realize that you cannot do business with Unlock.

If you can, the entire application process is online. You start by filling in some basic information about yourself and the property in question. This process only takes a few minutes (it took me less than two) and it will give you an idea of what you may pre-qualify for.

The information you need to provide during the prequalification process is:

  • Home address
  • Property type
  • Property usage
  • Home value (estimated is okay)
  • Debt on the property (mortgage and anything else secured by the property)
  • Credit score (estimated is okay)
  • Email address
  • Phone number

Once you submit this information, the site will immediately tell you the maximum amount Unlock can offer you and for what percentage of your home’s future value. If you want, you can change the dollar amount to any lesser amount, and the percentage will automatically change to tell you how much you’ll owe in the future.

From there, you’ll need to create an account with Unlock and schedule a call with a representative to move forward. You’ll have to verify some of the information you provided and upload the required documents:

  • Government-issued ID (driver’s license, military ID, etc.)
  • Proof of homeowner’s insurance
  • Mortgage statements
  • Lease agreements or proof of rental income (if applicable)
  • Trust documents (if applicable)

The company will then set up an appraisal and a home inspection (you will have to cover the costs). The results of these appointments will determine the final terms of the agreement. At this time, Unlock will also perform a soft credit check – but this will not affect your credit score.

If you decide to move forward with the home equity agreement, the company will send you an Investment Closing Statement with the final terms for you to sign. Once complete, Unlock will place a lien on your property with the county to secure the investment, but will not be added to the title except in rare instances.

This application process is relatively simple compared to other types of financing and the minimum qualifications are much more inclusive. To qualify to enter an agreement with Unlock, you must have:

  • Credit score of at least 500
  • 20% (or more) equity in your home based on current valuation
  • Maximum loan-to-value ratio of 80%

As you can see, you don’t need to have any verifiable income or any maximum debt-to-income ratio since a home equity agreement is not a loan. This can make it possible to enter a home equity agreement even if you’re out of work or you have other debts that you’re trying to clean up.

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Approval Time

Running through Unlock’s prequalification process takes just a few minutes. But moving forward with the agreement and having the money disbursed to you can take a few weeks, and it depends on a couple different factors.

After you make an account and complete your application, Unlock will reach out to you to schedule a call with a representative – which should happen within a few days. Upon verbal confirmation that you intend on moving forward with the financing, the company will schedule an appraisal and home inspection.

Following these appointments, Unlock will make any necessary adjustments to the terms (compared to the initial quote during pre-approval) and send the final agreement over to you for verification and your notarized signature. Once you sign, you will have three business days to cancel the agreement before Unlock will begin wiring the funds to your account.

In total, the process typically takes 30 days according to Unlock’s website. But the amount of time mostly depends on how long the appraisal and inspection appointments take. If you give the go ahead to move forward as quickly as possible and schedule the appraisal and inspection right away, it can take as little as ten days for the funds to be disbursed to your account.

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Customer Service

Unfortunately, Unlock offers no live chat or phone support, so any sort of real-time support is out of the question.

There are two other ways to contact Unlock’s customer support – an online contact form and email. I started with the online form, which you can see below. You just need to provide your name, number, email address, and let the company know what you’re writing in about.

Customer Service

After I filled out the form, I clicked Send Message and was expecting some sort of confirmation screen. But unfortunately, nothing happened. The screen didn’t change, my information remained on the screen, and I had no way of knowing if my message was received. So far, I have not received any kind of response, so I can’t confirm that this form even works.

As a last resort, I sent an email to the address listed on the website requesting more information and some insight into what I might qualify for. I never received any sort of response via email. So while there are a couple of avenues of contact, the lack of communication from Unlock forces me to score customer service low.

Summary

Overall, Unlock is a way to access your home’s equity without having to take out a loan and commit to making monthly payments. It’s a good option if you have poor credit or low income, but keep in mind that a lien will be placed on your house to protect Unlock’s investment.

This means that when the length of the agreement is up, typically after ten years, you will be obligated to either pay the amount owed out of pocket or sell your home to cover the amount. Depending on your financial situation at the time, this can create a slew of issues since the future is unpredictable.

While a home equity agreement with Unlock might be one of the fastest ways to access cash from your home’s equity and doesn’t require monthly payments, there are better options out there for those with good credit. In that case, you could try more standard types of financing through Figure or Credible instead.

FAQ

Is Unlock a legitimate company?

Although it’s a relatively new company, Unlock is a legitimate business located in San Francisco, CA. The company is accredited with the Better Business Bureau where it holds an A- rating.

What are the qualifications for Unlock?

Since Unlock doesn’t offer loans and there are no monthly payments, the requirements are not as strict as with typical financing options. To use Unlock, you just need to have at least 20% equity in your home and a minimum credit score of 500.

How long does the Unlock process take?

According to Unlock’s website, the application process typically takes about 30 calendar days from the time you complete your application. That said, the company boasts that it can take as little as 10 days depending on how quickly an inspection and the appraisal can get done.

Andrew Koopman
Written by
Andrew Koopman

Andrew Koopman is a freelance finance writer. He's written hundreds of articles over the years, specializing in topics such as improving credit, paying off debt, and applying for loans. Andrew graduated from Miami University with a Master's degree in mechanical engineering. He loves watching sports and enjoying the great outdoors with his friends and family.

Pros:
  • You can receive up to $500,000 for your home’s equity
  • No monthly payments due or interest accrued
  • Low credit score requirements (500 or higher)
Cons:
  • Only operates in 14 states
  • A lien will be placed on your home
  • You need least 20% equity in the property to qualify
Bottom Line

Unlock is an interesting option if you want to take advantage of the equity in your home, especially if a low credit score or income precludes other types of financing. With a minimum credit score of just 500 and no income verification, it has some of the lowest qualifications you’ll find.

But if other types of funding are available to you, Unlock might not be the best solution. At the end of the agreement, you’ll be forced to either sell your home or pay out of pocket to buy Unlock out, which can lead to financial and emotional stress, depending on unknown future circumstances.