A young financial technology startup, Nesto is raising 76 million as part of a new round of financing.
Entering the market just three years ago, mortgage broker Nesto says it has seen a 475% growth in mortgage applications on its platform over the past 12 months.
Its president and co-founder Malik Yacoubi now maintains that his company signs more than $ 100 million in mortgage contracts per month. In April, it was 60 million. It now has 92 employees.
With the money from this round of funding, we want to invest in people, in technologies and in marketing to make ourselves better known.
Malik Yacoubi, president and co-founder of Nesto
The goal is to make Nesto the largest mortgage instigator in Canada within five years, he reiterates.
To get there, Nesto is taking advantage of a strong tailwind, with the Canadian mortgage market being overexcited, as the Equifax credit bureau pointed out this week.
The number of new mortgages increased 41.2% in the first quarter of 2021 compared to the same period last year, according to Equifax. The average limit on new mortgages advanced 20.5% to $ 326,930 in Canada.
However, the market could calm down, Equifax said, following the introduction in June by the Office of the Superintendent of Financial Institutions of a new mortgage stress test for uninsured loans.
The DuProprio of mortgage brokerage
An online mortgage broker, Nesto is making itself known to the general public these days through TV commercials. The advertising message being that with Nesto, the customer has access, the first time, to the best mortgage rate available on the market.
The job of a mortgage broker is to find the best mortgage on behalf of the consumer by submitting his file to several lenders. The broker is paid by the financial institution that disburses the loan. The commission is set between 100 and 110 basis points, or between $ 4,000 and $ 4,400 for a loan of $ 400,000 with a 5-year term.
In Canada, nearly half of buyers in 2019 (47%) used a mortgage broker to negotiate their loan, according to the Canada Mortgage and Housing Corporation (CMHC).
Nesto wants to be in a way the DuProprio of mortgage brokerage, a new player who is shaking up the established order. Distinctively, Nesto’s brokers are paid only on salary, unlike those of the competition, who are paid partly on commission.
Currently, 50% of Nesto’s mortgage volume is in Quebec, 40% in Ontario and 10% elsewhere in the country.
Its financiers who put money back are Michael Rowell and Michael Paulus, the entrepreneurs of Insurance IQ. Also participating were Portage Ventures, Diagram Ventures (Desmarais family) and Breyer Capital, Marc Alloul and others.
The announcement was made Thursday morning.
“We have seen a transition to digital within the population [dans sa consommation de services financiers], especially those in insurance and investment, said in a statement Michael Rowell, co-founder of Assurance IQ. Mortgage financing is next on the list and Nesto is high on the list. ”