A new Canadian startup is looking to shake up the homebuying process by allowing homeowners to make their next purchase before the sale of their current home.
Fundible, which officially launched today in Alberta and Ontario, boasts 100% assured financing so that a homebuyer can make a financing-free purchase offer without having to worry about whether the funds will come through from another lender. It expects to launch in B.C. in early- to mid-2022.
“The problem Fundible solves is it gives homebuyers an option to safely write a purchase offer without a financing condition,” explains co-founder Jason Henneberry, an entrepreneur in Canada’s mortgage industry. Henneberry is also Director of Technology at Tango Financial and founder of DocAssist, MortgagePal and LenderSpotlight. “The borrower and property are fully underwritten before they write an offer, with a 100% guarantee that financing won’t fall through.”
There’s also no obligation for the borrower to use Fundible’s financing, which is provided through its exclusive funding partner, Calvert Home MIC.
“The borrower is free to obtain their mortgage with any institution they like, and they can work with their broker to source the best overall rates based on their unique circumstances,” Henneberry notes. “Fundible simply guarantees the purchase with a back-up mortgage in the event the borrower is not able to obtain traditional financing.”
This is a relatively new concept in Canadian real estate, and one that could prove attractive to homebuyers in today’s competitive housing market. One of Fundible’s selling points is that financing-free offers are more likely to win against competing bids with conditions.
Dean Koeller, President of Calvert, said the company is excited to be involved in bringing an innovative and new financing solution to the Canadian market.
“At Calvert, we’re committed to finding new ways we can enhance the financing experience for brokers and their clients,” he said. “Fundible’s approach is very much in line with our philosophy and simplifies the homebuying experience and makes it easier for buyers when it comes to negotiating their new home purchase.”
What’s the Catch?
This level of convenience and security for homebuyers does come with a small price.
Fundible charges a valuation fee of $259, which covers the cost of underwriting and property valuation. It also provides a “no/low-doc” client validation and in-house appraisal so that approvals can be turned around in hours, says Henneberry.
“The $259 fee includes up to three property valuations, which gives the client options for writing offers on multiple properties in the event they don’t immediately win the bid for the first home,” he said. “If they need to go to a fourth round, we charge $99 for additional property valuations.”
In the event the borrower can’t secure alternative financing from their preferred lender and requires a Fundible mortgage to close the deal, the fixed rate for a six to 12-month mortgage at 80% loan-to-value would be 7.99% with a 1.5% lender fee, Henneberry explains.
Since the term is completely open with no prepayment penalties, Henneberry said borrowers are incentivized to pay out their Fundible mortgage as soon as possible.
“We provide an interest credit back to the borrower if they can pay out our mortgage within the first 30-90 days, bringing the effective rate down to the low-4% range,” he added.