Fintech firm Unlock bags $280M capital commitment

Tempe, Arizona-based Unlock Technology, which helps homeowners access equity in their dwellings without a traditional loan, has secured a $280 million capital commitment to fuel its nationwide expansion.

An Arizona fintech firm wants to help homeowners unlock more equity in their dwellings (Image source)

The strategic partnership with global investment firm D2 Asset Management includes a $30 million Series B equity investment in Unlock along with a $250 million capital commitment from D2 to support the company’s original growth, Unlock said in a statement.

Also participating in the round were Saluda Grade, Second Century Ventures, and REACH, a proptech accelerator backed by the National Association of Realtors.

Founded in 2020, Unlock offers homeowners a way to access the equity in their home without having to take out a traditional home equity loan. The company’s core product, its home equity agreement (HEA), lets homeowners receive cash up front in exchange for a share of their home’s future value. It’s not a loan, so there are no monthly payments and homeowners don’t have to worry about interest rates, according to Unlock. It’s also available to property owners of all ages (unlike a reverse mortgage) and doesn’t require perfect credit to qualify.

Unlock, which has so far served 10,000 homeowners in 16 states, said it has experienced 98% year-over-year growth in adoption of its HEA. “This surge in demand reflects the increasing macro need for flexible and accessible financial products that leverage the value of homeownership,” the company noted.

The new funding will support Unlock’s growth and enable to company to expand its product offerings and invest in its technology platform. New products will include a more diverse set of home equity solutions geared towards specific homeowner segments. The tech platform will also be upgraded to improve the customer experience and bring advanced data analytics capabilities so Unlock can offer personalized recommendations and support.

“This funding validates our vision of democratizing home equity and empowering homeowners to achieve their financial goals,” said Unlock’s co-founder and CEO Jim Riccitelli in the statement.

Prior to starting Unlock, Riccitelli spent over a decade as co-CEO and president of San Francisco-based Unison Home Ownership Investment, a pioneer of the home equity investment sector. The consumer finance veteran also previously served as a senior executive at commercial real estate lending giant Nomura.

Home equity investment (HEI) companies are emerging players in the $32.6 trillion U.S. home equity market. HEI agreements stipulate how long an investment company will own a stake in someone’s home equity, as well as how much the homeowner will be required to pay back at the end of the term. Homeowners have to pay back the original lump sum provided by the investor as well as a percentage of the home’s appreciation over the term of the contract.

Unlock typically offers a 10-year term on its home equity agreements. While the homeowner can sell their house at any time, if they don’t sell by the end of the term, they will need to settle up with Unlock by buying out the company’s stake. In addition, homeowners need to pay an origination fee of 4.9% of Unlock’s investment, along with any required third-party expenses to appraise and inspect the home and record the transaction, the company’s website explains.