Why an Independent Mortgage Broker Advises on the Whole Market

What We Need to Grow, Episode 040: Start With Advice First. A Founder Talk conversation with Deren Hasip, Founder and Principal Broker of Mortgage Scout. Cleaned for readability; the words are the speakers' own.

Caleb Pedosiuk: Deren, really great to see you again. We're talking today about Mortgage Scout, and from our initial conversation, one of the things I thought was interesting is the timing of this conversation. I'm not an expert in the space, but in broad strokes, there is a ton of equity sitting right now in a lot of capital: houses, land. There's also this massive silver tsunami of boomers who have moved through every single aspect of the timeline of their lives, and a lot of them are now retired and looking at different things. So mortgaging, in one dimension, looks like just a house to someone. Do they have the house or not? What are the terms? But I look at this and think, doing this part properly, understanding the finances around it and some of these models, actually unlocks so much for people, depending on how they approach it. Those are my initial thoughts, but I'd love to hear from you. Can you share a little about Mortgage Scout, what you've built, and where things are at?

Deren Hasip: Yeah, 100%. So I'm a former banker. I spent a couple of decades working in the institutional space, and I'm very happy about that background, because it gave me a thorough understanding of financial concepts, principles and vehicles.

But as the market evolved, I realized that you could be great at your craft, and fantastic within your institution, but with evolving needs and a changing landscape, in order to really give advice to people it needs to be in the scope of an entire market, not just one institution. You may be great dealing with a financial advisor at RBC or Bank of Montreal or Scotiabank, and they do a great job in the context of what they have to offer, but they're never going to give you advice in the context of the full market. It goes back to what you said about evolving consumer needs and demographics. These are all factors that need to be taken into consideration. So I got to a point where I wanted to bring that financial expertise out of the institutional space, take off the shackles and the limitations, and get into the independent space to be able to give proper advice to customers. To do that, you have to come outside and look at it with a bigger lens and a larger scope, so you can be a better advisor.

So I made that leap. I left the institutional space and came out, and had to build a brand from scratch, which is never easy. Initially it's all about your individual credibility and your pedigree and background. What have you done? What have you learned? How do you apply it? And then you try to build that into a brand that's consistent. We came into the independent space in 2015, really drawing on what we knew from banking and finance.

One of the other factors that drew me into this space is that I felt the bar was way too low. It was way too easy to become a mortgage specialist or a mortgage agent, and I felt the space deserved a higher quality and calibre of service for customers. You alluded to it: mortgages tend to be, or have been, very transactional, but a mortgage is actually a tool that can be an enabler. So how do you take something like a debt vehicle, which is often construed as nothing but negative, and look at the positive impact of understanding how to manage and service debt to build wealth going forward?

You talked about it as well. You've got an ageing demographic of consumers, and sadly some people are retiring with debt and mortgages. And the reality today is that people are living longer. So how do you lever all of your financial assets, not just your investments but your real estate? How do you use mortgages to make more things possible?

That's essentially what we did. We wanted to build a brokerage with a key focus on financial literacy, bringing a higher degree of expertise out of the institutional space to give more wholesome, complete financial advice.

We also decided we didn't want to be generalists. We wanted to be specialists, and to work with professionals like real estate professionals, financial planning professionals and accounting professionals. We bring those players to the table. We focus on what we do, but we do it concurrently while consulting with other professionals to give more holistic advice. It's not my job to give tax advice, but I can work with a tax specialist to make sure what we're doing is much more tax effective. So that was the gist of what we brought to the table. It wasn't about building a brokerage that was going to be absolutely massive. It was about building a boutique brokerage that brought expertise and specialists to the table to give more tailored advice. And we were very, very fortunate to build a team that did just that.

Over the last couple of years we were recognized, and we won in 2022, which was really exciting. We had been listed as a finalist a couple of years in a row, and in 2022 we were recognized as the top brokerage in Ontario. When I looked at that list of very deserving nominees, we weren't the biggest brokerage on it. What got us across the finish line was that reputation management was absolutely key. We focused on delivering expertise and giving customers a great consultative experience that really focused on them. So: reputation management as far as the customer is concerned, and expertise and credibility as far as the institutional space is concerned. We wanted lenders to know the quality and calibre of the brokers who work here, because that gave us the latitude to sit down, have discussions, demonstrate our credibility, and negotiate yeses where there could have been nos.

All of that turned into us being recognized as a top brokerage, and it has also helped us expand to working as a licensed brokerage in BC. That's the gist of how we came into the space. When you're building a brand at the beginning, it's you. You are the brand until you redefine it. We're at the level now where, when we're talking to people, they may not know my name, but when I mention the brokerage they say, oh, I've heard of you guys. That's the litmus test that you've finally defined that experience. And who you pick to represent your brand is also a reflection of your fundamental principles, so you make sure you're building the right people, all steering in the right direction. All of those things define who we are and how we deliver to customers.

Caleb: One of the things that stood out to me on your website is the life stages, right there in the really important real estate of the upper navigation. It's the third thing: you've got Home, About Us, and then Life Stages. Under that you've got first-time home buyer, new family, home renovation, buying your next home, living with dependants, and the list goes on. I thought that was so interesting, because many times people look at things just in numbers, as a transaction. But realistically, numbers are an indication of story. If someone's purchasing a plane ticket or a hotel, it's part of a story. Being able to access funds, or unlock value and transfer it into something liquid, is linked to a part of a story in people's lives.

So I'm curious, using home renovation as an example: how many customers in any of those verticals typically come through a conversation or point of awareness in that vertical? Someone says, we're considering a bunch of landscaping, building out a deck, putting a sauna in the backyard. It'll add value long term, but we also want to enjoy it. How many of those come from a referral, say someone who builds big custom decks who says, talk to Deren, versus seeing you show up somewhere else or word of mouth?

Deren: That's a great question. Today's consumer is a heck of a lot more equipped than in days past, because they're not just going online and Googling things. They're using AI. So they're not just saying, give me the highest-rated broker in my neighbourhood. They're saying, I'd like to work with a professional who specializes in first-time buyers, who's highly rated, and who has representation in this particular market. Consumers are a lot more informed and a lot more acute about exactly what they're looking for, and I think that pairing works out well.

But life stages are something we've done deliberately, because if you want to get into a consultative transaction, it needs to be a consultation. And a consultation is exactly as you said: it's about the story. We focus on the conversation about who the customer is and what they hope to achieve today, but balance it against life stages, because life stages bring in not just the immediacy of what we're solving for today, but whether the plan is mindful of today and of future plans. That changes things completely. It can change the solution.

A good share of our customers are referred to us through partners: real estate partners, home renovators, financial planners, accountants, wealth advisors, insurance advisors. That conversation is a lot more tailored, because there's a great opening introduction. If a file comes through a financial planner and they're talking about where the client is in their life stage, you'll see there's pre-retirement and there's post-retirement. There's pre-retirement planning you should be doing proactively in debt management, because there's a fundamental shift from the household income you're generating pre-retirement to the limitations of a pension.

And then post-retirement, if you're retired and you have debt, how do you use your investable assets? How do you liquidate or melt down registered investment vehicles like RRIFs, LIFs and RRSPs? What's the impact on your pension? What kind of pension do you have and how does it fit into the picture?

The conversation is far more acute for customers who come through those partners, because the partner has typically pre-positioned it. If they're referred through a builder or a renovator, they already have some context for what they hope to do. But if the customer comes through an online search, the conversation sometimes starts with the transaction, because customers don't know what they don't know. They may start the discussion with a product, and what they don't realize is that the product has a shelf life and may not be the most suitable, or that lender may not be ideal. So by peeling back the layers of the onion, divesting ourselves of the transaction and focusing on life stage, what they're trying to solve for and why, we can have a real discussion and make it consultative. Customers don't know what they don't know, so this education process makes us part of that story. That's been the key contributor to our success.

Caleb: I have your site open here as well. Another item in your header is calculators, and you don't have one calculator, you have about ten: a mortgage calculator, purchase calculator, closing cost calculator, land transfer tax calculator, maximum mortgage calculator, required income calculator, debt service calculator, a side-by-side comparison calculator, a renewal calculator, rent versus buy. We have a client out of Montana that's exceptional, really dominating right now in AI search, in property management, doors under management for owners of investment properties who want someone else to look after them. That was really interesting, and it helped me understand a little of that market, and the calculator component is an interesting one. But I don't think I've ever seen so many calculators on a site. It's so smart to take that approach, because, like you said, more and more customers are savvy enough to ask: what are some options? Give me three. What would the banks be doing? What does private lending look like? We have some equity here, what would that look like? And ideally there are calculators that surface in that, a tool they can use to figure it out.

Deren: You know what I find? This is more about education than anything else, but I find the greatest failure in the lending space is the lack of substantiation of the advice. When you go to an independent financial planner, they'll give you a nice advice document, talk about your investment time horizons and your risk tolerance, and then put together a portfolio for you. For something to stick, you have to customize it to the customer. We do have these as DIY tools online, but it's a do-it-with-you consultation. If I work with you in that consultation process and use a tool to push out a piece of advice that's salient to you and your financial circumstances, I've gone from just having a discussion, which is still education, to substantiating the advice in an advice document.

That becomes a living, breathing thing customized to you. And if we build it together, the probability of you throwing that piece of paper out goes out the window, because it's something we built together. We're not going to make this a McDonald's type of relationship, where you come and tell us what you want and we throw it right back at you. We're going to probe. We're going to find out why that's the right product for you. Have you thought about what the features look like? Have you thought about how it solves for today and for tomorrow? We really challenge the customer's perspective. Sometimes the conversation starts and ends on the same product, but that discovery and discussion is where advisory, consultative selling really comes into play, so they understand we're listening. And it makes a difference.

And believe it or not, more people Google mortgage calculators than mortgage brokers. So if I can help you by leading with an advice-based solution, and a lot of these tools give you the option to export that piece of advice, we start with advice first. That's the core of our deliverable and what we're looking to bring to consumers, to help them make an informed decision.

Caleb: So where do you see Mortgage Scout five years out, 2030, 2031? If you were to paint a picture that would attract the right customers and the right partners, are there certain brokers you want to attract, or certain kinds of people who aren't brokers yet? People who genuinely care about others, who are active in their community, a certain skill set? I'm assuming there's an aspect of partnership you're looking for, and of course attracting the right customers. Could you paint some of that picture?

Deren: Yeah, 100%. Like I said, part of the reason we made that transition was to bring a higher degree of credibility, so financial literacy is a really big building block. There are incredible people who are looking to help others, and fundamentally that's everything. One of the first things we preach to everybody who works here is: you're not looking to get paid on every transaction, but I promise you this, if you do right by people, they will do right by you. If you focus on advice, you're sincere with your intentions and you're coming from a place of willingness to help people, you will succeed in this business. It's not an if, it's a when. We want people coming here to be consultative advisors. Listen, we are mortgage brokers. We are commissioned. We do get paid on the transaction. But focus on the relationship, because if you focus on the relationship, you will make money on the transaction. If it's not today, it's going to be tomorrow.

I can't begin to tell you how many times we've had customers come in, we have that discussion, and it doesn't turn into a transaction with us. But we've given sound advice and they walk away raving fans, telling their friends and colleagues and family members: I talked to this person, they were great at what they did, they gave me great advice, even though it was contrary to their financially vested interest, and they put me on the right path. That congruence is what builds strong relationships. We focus on relationships.

So where do I see us? I'm not looking to take over the world. We've got a very boutique approach, and it's been slow and steady growth. It's not about size and numbers. It's about quality and calibre. I see us continuing to carve out our niche, building our business as a brokerage that focuses on fundamental financial principles rooted in financial literacy, helping people be better consumers, but also challenging perspectives on what it means to be a broker. For some consumers, a broker is the last person you go to when a bank can't do your deal. What they don't realize is that the majority of the business we do is actually purchased by banks. So it's redefining what it means to be a broker, putting advice at the forefront, building one good advisor at a time, and building it on a portfolio of happy customers. We want to be the disruptor that challenges the space and brings advisory, consultative services to today's consumer.

Caleb: So banks would purchase it. I'm not that familiar with this space, but is private equity an active component? For example, if a family office with a certain portfolio says, we want a certain amount of our investments to go into real estate, is connecting with you directly one of the lines you look at among your funding options?

Deren: Yeah, 100%. It's quite complex. There are a lot of layers, and it's not for every investor coming into this space. There are a couple of different ways to do it. You can go into a mortgage investment corporation, which is basically selling you shares, and that entity then gets involved in private lending. You're not getting into a specific property. The investment is diversified across a number of different assets, so you still get the benefit of that type of return without tying everything up in one property or project.

And for people who have the capital, the education and an understanding of the risks, there are private investors coming into the space looking at short-term investment loans. Private lending is not meant to be an ever-never plan. It's not a long-term solution. It's meant to be an interim solution, and the key is assessing the exit before getting into the loan: understanding that your time horizon is no more than one to two years, having a very good understanding of the risk in the file, and making sure the probability of executing the exit strategy is good. It's not for the faint of heart. If a family office comes in as an investor, they need the risk tolerance, a reasonable timeline, an understanding that this isn't discretionary liquid capital, and a partner who will effectively measure the risk and make sure the presented exit strategy is viable.

That's the cool thing about being an independent broker. We have access to many different lines of capital. There are the tier one institutional lenders, the TDs and Bank of Montreals of the world. You can shift over into the credit union space, which is provincially regulated and doesn't necessarily have to comply with federal guidelines, giving you a little more flexibility. And then there's the subprime space, which gives you a lot of room to help customers with challenging credit or non-conventional income, looking not just at tax documents but at cash flow, lending on business revenues rather than personal taxable income. That's where education of the industry and the consumer comes back in. We need to redefine who we are and how we play in this space, and education is going to be the way to do it.

Caleb: Very cool. So, probably my favourite question, and one I try to ask all the guests: what is the one thing you would say you need most to grow right now? It doesn't have to be an obstacle. It could be a goal you're moving toward. Sometimes it's, we're ready, we just need capital. Sometimes it's, we really need a new COO. Sometimes it's pipeline, we've got to turn the faucet on. If you could wave a magic wand and fix one piece, what would it be?

Deren: You know what, the answer on all fronts is people, in the context of relationships. People as in good people with strong principles and a good background to come in and be good advisors. Good people as customers who understand the value of advice and consultative service, who divest from just the transaction and look at the bigger picture. And good people and partnerships on the lending side as well. People solve all my problems: great staff who care about every customer and understand that in every transaction there's a human being at the back end, and we have to take care of them from start to finish, get them across the finish line and give them a great experience. Fundamentally, if you focus on relationships, everything else takes care of itself. Relationships with customers, with great advisors, with strong staff who want to row in the same direction as you, and incredible relationships in the industry that build a strong, diverse suite of lending solutions and partners for the benefit of all our customers.

Caleb: Deren, I love that. It's funny you mention people, because as you were talking earlier I was thinking about the digital moat. People ask whether there's a moat. Even with Anthropic and OpenAI right now, there's discussion that there's no real moat for what they're building, because the open models are right on their heels. That's a separate discussion. But if we're dealing with ones and zeros, pixels, in digital space, and more and more becomes interoperable, where is the moat? The thing I keep coming back to is that one of the most beautiful parts of existence is human beings. In the last two months of doing these conversations I've talked to about 55 different founders, and about 35 of those have been podcasts so far, and what stands out is how remarkable people are across the board. Different problems being solved at different levels: someone in regenerative agriculture, someone fighting human trafficking, someone solving something way out there in biosciences or robotics or aerospace. And a lot of them need the reminder to touch grass and feel the sunshine, whether it's minus 40 or plus 20 outside. With so many signals out there in the news, I think it's a beautiful reminder that the things that draw communities, neighbourhoods and people together, breaking bread among them, are probably what would solve many, many more problems.

I really appreciate you sharing this. Thank you so much. Mortgagescout.ca, where all those calculators are, as well as the resources for the different stages of life. Thank you for sharing today.

Deren: My pleasure, Caleb. Thank you for having me here.