HighTechLending has expanded eligibility for its lowest-payment home equity option, allowing homeowners as young as 55 to qualify using a minimum payment equal to 1% of their outstanding annual loan balance.
The wholesale lender also opened payment options starting at 3% to borrowers ages 50 to 54 and increased maximum loan-to-value ratios across all five of its EquitySelect payment plans. HighTechLending did not disclose the previous or revised LTV limits in its announcement.
The changes apply to the company’s first-lien EquitySelect loan and second-lien home equity line of credit and are available immediately through its wholesale channel.
“These enhancements reflect our continued commitment to helping lending professionals serve more homeowners with responsible, flexible home equity solutions,” HighTechLending CEO David Peskin said. “By expanding eligibility and increasing borrowing capacity, we’re enabling our partners to help more borrowers access the equity they’ve built while overcoming many of the qualification challenges associated with traditional home equity products.”
Lower Payments Open Another Qualification Path
EquitySelect allows borrowers to select a minimum payment plan ranging from 1% to 5% of the outstanding annual balance. That annual amount is divided into monthly payments and used as part of the borrower’s qualification.
The percentage is not the loan’s interest rate.
For example, a borrower with a $300,000 balance under the 1% option would begin with a minimum payment of approximately $250 per month, or $3,000 annually. Because that payment would likely fall well below the interest accruing on the loan, unpaid interest would be added to the principal balance.
HighTechLending discloses that the product can negatively amortize and result in a balloon payment when the loan reaches the end of its 40-year term, is paid off or becomes due earlier. Borrowers may pay more than the required amount without a prepayment penalty.
The loan carries a variable rate based on the 30-day average Secured Overnight Financing Rate plus a margin, according to company materials. Its wholesale calculator currently displays illustrative margins of 5.49% and 5.99%, although actual rates and pricing depend on the transaction and are subject to change.
The structure is intended to help equity-rich borrowers who have difficulty meeting the debt-to-income requirements associated with traditional HELOCs. HighTechLending’s wholesale materials list a maximum DTI ratio of 50% and a minimum credit score of 650.
First- And Second-Lien Options
The first-lien version can replace an existing mortgage or provide a line of credit on a home owned free and clear. It carries a seven-year draw period and offers line amounts of up to $4 million, according to HighTechLending’s current product information.
The second-lien version sits behind the homeowner’s existing mortgage, allowing borrowers to access equity without refinancing a low-rate first mortgage. It carries a five-year draw period and offers lines of up to $1 million.
The distinction is important because HighTechLending’s announcement broadly described the EquitySelect product line as offering amounts up to $4 million, while its more detailed product information lists separate limits for the two lien positions.
Both versions require a minimum initial draw of at least $75,000. For first liens, borrowers must initially draw at least 50% of the credit line or enough to pay off the existing mortgage, whichever is greater. Second-lien borrowers must draw at least 80% of the line at closing.
The loans are nonrecourse, meaning borrowers or their heirs will not be personally responsible for debt exceeding the home’s value. Borrowers must still comply with the loan terms, including maintaining the property and paying applicable taxes and insurance, to avoid default or foreclosure.
