Combatting Gatekeeping in Real Estate With Digital Mortgage Brokerage

Anyone who’s worked in the banking or lending industry will know that change is hard.

In a centuries-old business world, the need to “evolve with the times” is often overlooked, mainly when firms usually act as gatekeepers that all but force customers to play their game, no matter the inconvenience.

At my fintech startup, Perch, we’re flipping the script and using technology to get an edge over the big players. Perch is a digital mortgage brokerage. We’ve taken the traditionally painstaking process of getting your mortgage with the bank and automated it into a 20-minute process. We spend the rest of our resources teaching the user and giving them insights on their decisions, with complete transparency along the way. Unlike most mortgage brokerages, most of our team are developers and designers, not mortgage brokers.

What is a digital mortgage company?

For most of us, buying a home is a huge deal. Especially for first-time home buyers, it can be hard to figure out what you have to do and in what order. Our analytics platform walks you through every step of the way so you’re given the information and timeline you need to make the right decision. We answer questions like “How much ‘home’ can I afford today?” and “How long will it take until I can afford my dream property?”

Home buyers ready to make an offer can get a mortgage pre-approval online in less than an hour. After signing up and submitting your details, you’ll be able to view the mortgage offers available to you instantly. The entire application process can be done online.

Complete your pre-approval and get your mortgage approved in less than 48 hours. This means not having to wait for someone to call you back or needing to travel to a bank or credit union to fill out paperwork.

The average Perch user saves $1,500 per year on their mortgage, compared to going with a bank. Perch has recently raised $4 million in seed round funding.

How did you come up with the idea to start Perch?

I spent seven years working in the financial sector, and in that time, I saw how broken our system was, especially in the mortgage and real estate industry. Too many companies were still heavily reliant on paperwork and operating inefficiently.

A lot of time was wasted between different parties through coordinating, providing status updates, and following up. Customers didn’t have equal access to the same information. They had to trust financial advisors, brokers, and mortgage specialists at banks without seeing the numbers for themselves and understanding if they were making the right decision.

There was a pessimistic outlook for home buyers, where increasingly, Canadians viewed homeownership as an unattainable goal. Those who were approaching retirement or already retired lacked sufficient liquid assets to fund their golden years. Unfortunately, this meant people would rely on tapping into their home equity to get by.

After confirming that no other company was addressing these issues holistically, I set out to do it myself in 2018.

The first product we built was, well, not great. Initially, we created a fully automated solution allowing users to compare and select a mortgage independently.

We soon had our first “aha” moment when we realized people weren’t willing to make such an important decision without having the ability to consult a trusted advisor for 1:1 support, so we adapted.

Today, Perch offers home buyers and homeowners a proprietary analytics platform supplemented by a dedicated advisor that helps them strategize and figure out the best path forward.

How did you start the business?

Once I had the idea, I needed to validate it. I invested about $20,000 of my capital to develop an MVP, which mainly paid for a freelance engineer I found on Upwork overseas. I had zero consideration for design and was more interested in whether the user found the outputs and functionality useful.

Once I had the prototype, I went through my immediate network to see if anyone could spare 15 minutes of their time for a demo. That gave me 15 initial testers that went through the product.

I didn’t pick people like my mom, who would tell me the platform was excellent no matter what, but instead relied on people I knew a bit less formally or that I knew would give me honest feedback.

It was great to get their input, so I could solve the most significant issues upfront. With no regard for design, the user experience was awful, so I had to be super hands-on in guiding them through the platform when testing.

After doing the first batch of testing and making some overhauls, I invested another $30,000 in designing and engineering to improve it. With this enhanced MVP (2.0), I then took it for more informal feedback from strangers. I would literally go into places like food courts and search for someone eating lunch alone and then ask them if they had 10 minutes to demo and provide feedback.

I’d pick food courts in the basement of enormous tech companies to increase the chances I ran into someone who worked on a software platform to improve the quality of feedback received. Surprisingly, most people were pretty receptive and open to walking through my demo. I got another 10-15 testers to validate that I was onto something.

What’s next for the business?

Since the first launch, we’ve learned much from our users, and our product has come a long way. Here are some key stats on the company over the years:

• The team was 3 people (including myself) up until mid-2019. We are now 20 in 2022.
• We’ve doubled our customer lifetime value while maintaining an ongoing customer acquisition cost. We’re on track to be profitable by mid-2023.
• The velocity of our growth was pretty limited as we essentially bootstrapped our way up to where we are today (only a small circle of friends & family around). Over 80% of this revenue has been organic or through user referrals, not paid ads.

We’re currently working on building up a library of content for our users to answer any questions they have about the mortgage process and homeownership in general.

At Perch, we work with you to help you get approved for the mortgage you need, with dedicated mortgage specialists available to help you through the process.