A Toronto firm says it is offering an alternative to Home Equity Lines of Credit (HELOCs) and reverse mortgages for homeowners who want to use their real estate equity without taking on new debt.
Futureshare gives homeowners a lump sum free of ongoing payments and interest rates in exchange for a percentage of the home’s appreciation, which can be paid out without penalty at any time or once the property is sold, the company says.
The company says its online platform is the first of its kind in Canada and is now live in beta and accepting online applications for homes within Ontario, with plans to launch in Alberta, Manitoba and British Columbia by the end of 2017.
“Canada’s housing market has billions in untapped equity and Futureshare is giving that wealth back to Canadians to help them reduce financial stress and live happier lives. We’re revolutionizing the process by giving Canadians an alternative to home equity loans or HELOCs that’s interest rate and payment free, allowing them to unlock their real estate wealth and increase their cash flow,” says Michael Orrbrooke, CEO and founder of Futureshare. “Whether it is, for example, for home improvements, debt consolidation, for funding retirement or investing in a small business, Futureshare wants to help Canadians achieve their financial goals without adding new debt.”
Unlike a reverse mortgage or HELOC, Futureshare doesn’t require homeowners to have perfect credit scores or to fall within a specific income bracket, and it doesn’t increase monthly payments, the company says. A homeowner’s eligibility is based primarily on their home value and whether they have at least 25 per cent equity ownership in their home. Homeowners will be able to access on average up to 10 to 20 per cent of their home equity using Futureshare’s platform, the company says.
Homeowners can use an online equity release calculator to see how much of their wealth they can unlock. Once they complete the 90 second pre-qualification questions, the homeowner receives a real-time conditional offer outlining the details of the equity release amount and terms they could receive. The home is then appraised and a final offer is sent via email by Futureshare to the homeowner, with the credit application and underwriting process continuing online. Homeowners receive their funds, via electronic transfer, on average within 10-15 business days of signing the final offer, the company says.