EquityKey, which formerly offered a product that allowed homeowners to sell their future home appreciation has revamped its product for rollout into the market. The company is back online with new funding partners, allowing homeowners with at least 35% equity to receive between 6% and 17% of a property’s current appraised value in exchange for future appreciation.
The San Diego-based company, which previously purchased future home appreciation and hedged its risk with life insurance, is now offering a product that is open to all ages and does not require an upfront health screening.
The new EquityKey product is based on the Case-Shiller Home Price Indices—a national measure of home price appreciation released monthly.
“It’s now available to all ages,” says Wendy Beerbower, vice president of sales. “That said, I think we will probably skew to the majority of clients being baby boomers and seniors.”
The new product is not a loan, rather, it is a performance deed of trust. The homeowner agrees to a percentage of home value appreciation upon signing of the contract with EquityKey, and can use the proceeds of the agreement however he or she chooses.
The product is not geared toward a specific consumer group, but EquityKey sees it appealing to the “sandwich generation” of baby boomers who are helping aging parents as well as adult children financially.
“The aim is to provide liquidity to people when they most need it,” Beerbower says. “When their income stream is diminished or gone.”
Currently, the product is being offered in California, New York, Connecticut, New Jersey and Florida, with plans to further introduce it through channels including financial planners and real estate professionals.
The homeowner receives the funds from EquityKey within four weeks of application, with the only fee being the cost of the home appraisal.
If the homeowner moves within a certain number of years, he or she will face an early termination penalty. That period runs about seven to 10 years, before which the homeowner will owe a minimum settlement amount.
“This is a great solution where debt might not be the right option,” Beerbower says. “Maybe selling an equity share is. We’re covering the downside as well. If someone gets $100,000 from EquityKey and the home value drops, they’ve already gotten that $100,000 and are keeping themselves whole.”
Written by Elizabeh Ecker