Written by Andrew Seale
For nearly a decade, comparison sites have attacked the mortgage market like antibodies promising solutions to the woes of homebuyers in a post-recession world. Banks have pushed back, hiring hip marketing agencies to capture the attention of their biggest blindspot, that generation of first-time homebuyers, the millennials.
The problem, says Jesse Abrams, founder and CEO of tech-forward mortgage broker platform Homewise, is everyone’s focused on price rather than education. It’s a revelation Abrams made while working at an ad agency that was tapped by a major bank to create campaigns surrounding first-time homebuyers.
“We took a year and a half then the campaigns were cancelled and we never really did anything with them… I learned a lot about the banks,” says Abrams. First, they don’t seem to understand first-time homebuyers. “And I also got to look underneath the umbrella and see that banks are (not) always looking to provide the best rates, provide the best products, or enable clients to negotiate to get some investment mortgage.”
Abram’s perspective was reinforced when he jumped into the process himself, looking to purchase some real estate for the first time. “I just found these rate sites confused me because I didn't know what type of consumer I was,” says Abrams. He got a lot of calls from lenders telling him the type of consumer he wasn’t. “I got put in touch with a broker who had an hour and a half call with me then sent a four-page Microsoft Word document to print, fill out with a ton of back and forth… I felt totally lost in the entire process and just never knew where I stood.”
He calls it his classic “there’s got to be a better way” moment. So he capitalized on it by pulling together his favourite tech people and creatives and got them on board. “We all quit our jobs in roughly March of 2018, started working in the basement of my house and built Homewise.”
The startup launched with 30 lenders on board from major banks to credit unions. “We tried to make the easiest application process possible – it's only five minutes, it asks human questions that people would understand,” says Abrams. “Then we use data intelligence to match our clients with the best three mortgage options from these 30 lenders.”
Three is a nice number, says Abrams, it keeps you from getting trapped in the paradox of choice, that Netflixian feeling of scrolling for hours. Each option denotes what the type of lender is, what the rate is, what the key features are, and why these key features are actually right for these consumers. “A big miss is people think the rate is the most important thing in the mortgage,” he says. “Actually the key features are oftentimes even more important because rate might save you a couple of thousand dollars but if you don't have the key pre-payment privileges or portability, that could cost you tens of thousands of dollars, which is more expensive in the end.”
Homewise handles the negotiations, whether it's pre-approval, approval, switch or refinancing and shepherds the client right through to the end of the process, closing the deal. In addition to keeping things simple and transparent, the platform deftly tackles mortgage seeker questions.
“We've worked with many people who never thought they could afford a home yet helping them understand what their affordability is, what types of mortgages would be available, what type of lenders are available,” says Abrams. “We’re helping people realize their home buying dreams.”
Homewise is in the midst of an expansion from Ontario to other provinces (and eventually internationally, says Abrams) but Toronto has been the perfect test-bed. “It's roughly 40 per cent of the mortgage marketplace in Canada alone,” says Abrams. “But one of the nice things about Toronto as well is the ecosystem that's been created, there's a ton of startup founders who we meet with, provide advice, provide partnership opportunities.”
He calls it a “high tide raises all ships mentality.” “Even though we were never part of an accelerator, we seem to have met some way different people who provide us advice and connections and insights that are invaluable to us,” he says. “Every person I seem to meet in Toronto introduces me to two or three other people.”
Photo credit: Cameron Bartlett (www.snappedbycam.com)