Fraction is not like your average home equity loan. Although Fraction allows borrowers to make optional monthly payments, you can choose not to.
This means you can pay off your entire lump sum loan at the end of your term, with no payments along the way.
The length of your Fraction Mortgage repayment period depends on the term you choose:
When the draw period ends, you enter the repayment period. During this time, you can no longer access any of the funds you may have paid back during the draw period.
Any payments you make after your draw period cannot be redrawn. All prepayments you make go toward your interest accrued then to the principal amount of your loan.
This means that the amount of interest will be calculated on top of the amount you are left with at the end of your draw period. This benefits the borrower, as the total amount that the interest rate will be applied to is going down over time as you make more prepayments.
Your final payment amount will include the remaining balance on the loan less the prepayments you made and the interest accrued.
With a Fraction Mortgage, our rates are variable and when you are ready to repay your loan, the amount you pay back– with interest, is based on the appreciated value of your home, based on the Zillow Home Value Index
(ZHVI) by zip code.