What happens after the loan has been funded? Here's everything you need to know about managing your Fraction Mortgage once you’ve received your funds.
Accessing your funds
Once your application has been reviewed and you have signed all the necessary documents, we will send you your money. Fraction can typically fund in less than 10 days. Learn more about our funding process here.
Once you receive the lump sum payment, the sky's the limit. You can invest in a home upgrade or repairs, start a new business or pay down existing mortgages or debts.
Determining the amount you pay back
The rate on a Fraction Mortgage is determined by the appreciation rate of your home, with a minimum and maximum rate. Review our current rates here.
The Fraction Interest Rate is calculated based on two appraisals. Initial appraisal on approval, then a final appraisal on early payout, sale, or end of term.
Exiting your Fraction Mortgage
Approximately 90 days before the expiration of your loan term, Fraction will send you a letter indicating that the loan is due soon.
During this time, up to 30 days before the end of the term, Fraction will work with you to determine how you plan to settle the Fraction agreement, be it through selling your home, a buyout, or refinancing your Fraction Mortgage.
There are four potential exits to a Fraction Mortgage; sale, refinancing with Fraction, repayment of Fraction agreement, or default.
Any of these events may be triggered by preceding events, including:
• passing of all owners or occupants
• illegal activity
• deterioration of property
• or breach of Fraction Mortgage terms.
Selling your home
A home sale is a standard way for homeowners to exit their Fraction Mortgage. Since there are multiple considerations to a home sale, Fraction will work with you to determine the most straightforward path.
There are specific pieces of documentation and processes necessary at this stage. Contact Fraction to learn more.
Renewing a Fraction Mortgage
You have three options at the end of the term: sale, buyout, or refinance. In the event of a refinance, which means repayment of the existing Fraction agreement and ultimately originating a new Fraction agreement, the following steps apply.
Fraction will send you a settlement letter at least 90 days before the expiration of the term. We will also work with the homeowner to understand what path they would like to choose at least 30 days before the end of the term.
At the end of your term, you can choose to refinance for another term. Refinancing is contingent on meeting the underwriting guidelines at the time, such as meeting the minimum credit score requirements and a satisfactory appraisal.
Refinancing requires a new appraisal. Fraction covers the cost of a new appraisal when refinancing and at the end of the term to see how the value of your home has changed over time.
Fraction will use the appraisal to determine the exit value for the existing Fraction agreement and the starting value for the new Fraction agreement. This agreement will feature new terms and updated minimum and maximum rates and be sent to the homeowner along with repayment information. Once approved for refinancing, the new loan amount will be based on the new appraised value.
Homeowners must repay Fraction before entering into a new agreement. Upon agreement of the new terms and contract, along with the repayment of the current loan, Fraction will execute another loan to the homeowner.
Upon payment and agreement, Fraction will wire the funds to your solicitor.
Homeowners can choose to exit their loan at any time during their term.
The amount you pay back is based on the home's current value. Fraction will evaluate the property's current value via a third-party appraisal and determine the interest rate to be paid. The interest rate is determined as the greater of home price appreciation, the minimum or maximum interest rate accrued over the term to date in addition to the principal.
Learn more about how home values are calculated here.
Paying Fraction back
Fraction has no monthly payments. When paying Fraction back, the entire loan amount must be paid in full. We do not accept partial payments.
At the end of your term, you can pay Fraction back using one of the following payment methods:
• Preauthorized transfers
• Through the online portal (ACH)
What happens if I can't pay a Fraction mortgage back?
The Fraction Mortgage is a loan secured by your home. If you fail to pay your loan amount back during the repayment period, you risk foreclosure.
If you think you'll be unable to pay Fraction back, contact us immediately.
Maintaining and renovating your home
When you work with Fraction, you must ensure that you continue proper maintenance and upkeep of your home. Ultimately, you must ensure that the property remains in a similar condition to when the initial appraisal was completed and when you signed the Fraction Mortgage agreement.
Fraction Renovation Credit (FRC): Fraction offers a renovation credit to customers who make improvements and renovate their homes throughout the mortgage. Here is what you need to know to qualify:
• The renovations must be at least $5,000
• Fraction requires an itemized list of what improvements were done
• Fraction requires both before and after photos
• You must inform Fraction at the time of notice that you wish to have the FRC applied and supply the above-mentioned items to Fraction