Amazon.com Inc. AMZN employees will soon have the option to use their company shares as collateral when buying homes, under an arrangement with an online mortgage lender Better.com.
What Happened: Better.com has partnered with the e-commerce giant to offer an arrangement that enables company employees to leverage their shares as collateral when purchasing homes.
See Also: Everything You Need To Know About Amazon Stock
The program called “Equity Unlocker” will be launched in New York, Washington and Florida. Eligible individuals include current and former employees of Amazon, who have vested equity in the company.
The program allows employees to pledge their shares for loans for down payments instead of having to sell them to raise cash, according to Better.
With a standard mortgage, cash must be used as the down payment. In the Equity Unlocker program, homebuyers will have their equity valued at a 50% advance rate, meaning if they have $200,000 in Amazon stock, they can pledge that to cover $100,000 toward the down payment, said Better.com.
The mortgage program will charge a higher interest rate ranging from 0.25 to 2.5 percentage points above the normal market rate, depending on how the employee structures the down payment, according to a report in The Wall Street Journal.
Why It’s Important: Although the program comes with a higher interest rate, it offers employees an alternative financing option without having to sell stock, which may be an advantage for those who want to retain ownership.
According to Better CEO and founder Vishal Gargthe loan arrangements will remain secure even if the stock price decreases, reported WSJ.
The program is in line with Amazon’s benefits program for its employees, which prioritizes their financial, mental, and physical well-being, an Amazon spokesperson told WSJ. Earlier, in January, Amazon Pharmacy introduced RxPass in select US states as a Prime membership benefit, offering patients affordable access to generic medications that treat over 80 common health conditions for only $5 per month.
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