A Montreal-based tech start-up is looking to disrupt the mortgage business by allowing consumers to find and compare rates online – but some brokers insist that there is still value in face-to-face interactions with mortgage experts.
The start-up, called Nesto, has already made in-roads in the hot markets of Quebec, Ontario, and British Columbia and is now looking to expand its services throughout Canada.
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“We’re really proud to be a Montreal-based company going after the market across Canada,” Malik Yacoubi, founder and CEO at Nesto, told the Montreal Gazette. “We’re looking to disrupt this market from Montreal and create jobs and opportunities here,”
According to the Montreal Gazette, Nesto acts like a traditional mortgage broker and takes commissions from lenders. However, Nesto passes some of the commissions back to the clients, leading to even lower rates. The company already works with 20 lenders, including large banks such as Scotiabank and Desjardins.
“One thing that we see in the market is to some extent the interest of the mortgage broker is opposed to the people they are servicing, because the higher the interest rate is, the more money they make,” he said. “Even if the rate is low, sometimes there could have been a better deal available.”
Despite the potential for disruption, Yacoubi insists that there’s still room in the market for traditional mortgage brokers. “We’re a friendly competitor,” he told the Montreal Gazette. “It’s a market where there is a lot of competition. The reality is, it’s just such a big market there will never be winner takes all. There is room for everybody.”
Montreal mortgage broker Jason Zuckerman agrees, telling the Montreal Gazette that the increasing complexities of applying for a mortgage means that the expert advice of a broker will always be needed. “Mortgages have gotten more complicated, and you need to ask more questions,” Zuckerman told the Montreal Gazette. “It’s not as simple as it used to be.”
He also added that many clients prefer dealing with an actual person in what is likely one of their most important financial decisions of their life.