I recently heard about a loan product called an HEI - Home Equity Investment. I spoke with a senior client who has significant equity in her home, however is in need of some cash to sustain her financially. I have done some preliminary research on companies such as Point and Splitero who offer such a product.
I'd appreciate any information anyone may have as to whether this is a viable option or something to be avoided. Thanks!
Accountant · Seattle, WA · Member since 2025 · 149 posts · 42 votes
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That’s a good question @Addie Miles , and HEIs are probably worth evaluating carefully rather than dismissing them outright or treating them like a traditional loan. This is one of those situations where the right answer can depend a lot on the homeowner’s broader financial picture and goals.
The main appeal is easy to see: there is typically no monthly payment, which can help someone who is equity-rich but cash-flow constrained. For a senior homeowner, that may feel less burdensome than a HELOC or cash-out refinance, especially if fixed income is a concern.
The tradeoff is that the homeowner is usually giving up a share of future appreciation, and depending on the agreement, the effective cost can become expensive if the home increases in value or if the fees, caps, appraisal terms, or settlement provisions are unfavorable. It is not really “free money,” even though the lack of monthly payments can make it feel that way.
It would also be worth comparing it against other options, such as a reverse mortgage, downsizing, a traditional HELOC, family support, or selling and repositioning the equity, depending on the person's age, cash needs, health, estate goals, and how long they expect to stay in the home.
The key items to review closely would be the payoff formula, appraisal assumptions, agreement length, fees, what happens if the home value drops, what triggers repayment, and how heirs are affected. It may also be wise to have an elder law attorney or financial advisor review the agreement before anything is signed.
So it does not seem automatically bad, but it is definitely a specialized tool that should be compared carefully against the alternatives. In the wrong situation, it could be costly; in the right situation, it may solve a cash-flow issue without adding monthly debt.
