Hometap updates HEI pricing with two-tier multiplier

Home equity investment (HEI) company Hometap has introduced a new pricing structure that it says will lower the cost of accessing home equity and make its products more competitive with traditional borrowing options such as home equity lines of credit and home equity loans.

The Boston-based financial technology company announced Tuesday that it is implementing a two-tier pricing model for its HEI products, which allow homeowners to receive cash in exchange for a share of their home’s future value rather than taking on monthly loan payments.

Under the new structure, homeowners who settle their investment within the first five years will be subject to a 1.65x multiplier on Hometap’s initial investment as a percentage of the home’s value.

Homeowners who settle after five years will be subject to a 1.80x multiplier.

The company said the changes are intended to simplify costs and provide homeowners with greater flexibility when tapping into home equity.

“As rising insurance premiums, property taxes and other homeownership costs continue to place added pressure on monthly household budgets, homeowners need financial solutions that work for them, not against them,” Hometap CEO Jeffrey Glass said in a statement.

Hometap also adjusted its cap on investment costs, setting it at 18.5% compounded monthly. The company said the cap serves as a consumer protection measure by establishing the maximum potential cost of an investment upfront.

Homeowners can continue to settle their investments at any time before the end of the term without prepayment penalties, according to the company.

Hometap President Sarah Dekin said the updated pricing narrows the cost difference between home equity investments and more traditional home equity products.

“With our new pricing, we’ve significantly closed the gap between HEIs and traditional home equity products like HELOCs and home equity loans,” Dekin said. “When you factor in the flexibility of no monthly payments, this becomes a genuinely compelling option for a much broader range of homeowners.”

The pricing changes come as homeowners continue to hold substantial amounts of home equity while facing higher housing-related expenses and elevated interest rates. HEI providers have increasingly positioned their products as alternatives to traditional borrowing, particularly for homeowners who may not qualify for or want additional debt.

But while HEIs and shared-equity products have gained popularity, the sector has faced increased scrutiny over whether consumers fully understand how the products work and the costs involved. Some providers have been accused of using misleading marketing and disclosure practices.

Earlier this year, home equity investment company Unison was named in a class-action lawsuit alleging that its agreements leave homeowners with less equity than expected and that the products were marketed deceptively. Unison has denied wrongdoing.