Highclere Capital Lending, backed by industry veterans, began taking shape last summer and is gearing up to serve its first clients by the end of April.
The company is led by CEO Leon Dadoun, who brings four decades of experience in Canadian and International banking with a specialty in debt capital markets.
Similarly, President Paul Grewal brings expertise from a long career driving growth and innovation, having previously led teams at Balmoral, Morcorp Capital, Street Capital Bank, and FirstLine Mortgages.
Dadoun sees international capital markets as a key differentiator for Highclere’s strategy. While many mid-market lenders rely on retail deposits or traditional securitization, Highclere is working to establish a more liquid secondary market for uninsured mortgages—something that has remained elusive in Canada
He tells Canadian Mortgage Trends that while global funding sources remain largely untapped by mid-market lenders, a lack of expertise and ambition has kept competitors from filling the gap—compounded by an over-reliance on retail deposits as the primary funding source for mid-level banks.
A new approach to mid-market funding
Dadoun points out another key challenge facing many mid-market lenders—their reliance on a broker-to-broker model, which can put pressure on profitability.
“If you look at a number of the mid-market banks out there, they’re really operating what is known as a broker-to-broker model,” he says. “They’re paying broker commissions on the asset side of the balance sheet, and broker commissions on the liabilities side of the balance sheet, and so that squeezes margins and makes them somewhat less competitive.”
Expanding beyond traditional funding sources is central to Highclere’s approach. While the company will first enter the market with insured and insurable mortgage products through established bank aggregators, it is already laying the groundwork for its Alt-A portfolio.
By actively promoting Canada’s mortgage industry to foreign funds and investment dealers, Highclere has secured new financing channels to support this expansion and, ultimately, a broader push into capital markets funding.
“There is an inflection point between the difference in the cost of capital markets funding, and the difference in cost of brokerage deposits where you would rather pay that delta,” adds Dadoun. “What Highclere loses in not being able to take in retail deposits, it more than gains from the ability to operate at a higher leverage than any mid-level retail bank would.”
Two other key factors help set Highclere apart—its commitment to integrating cutting-edge AI and machine learning into its adjudication process, and its exclusive focus on national brokerage partnerships, with no plans for direct-to-consumer offerings.
Grewal’s experience in partnership development and technical integration plays a crucial role in both initiatives.
Leveraging AI for faster approvals
While AI will be integral to Highclere’s underwriting process, the company has yet to reveal the specifics of its fintech and AI partnerships.
Those details are expected to be announced soon, but for now, Dadourn and Grewal tell us they company’s focus remains on developing advanced tools to streamline the underwriting process.
Highclere expects to roll out rule-based product pricing and decisioning tools within the next year, aiming to automate key aspects of underwriting and credit assessment.
“The objective is to eliminate the manual bottlenecks in mortgage underwriting,” says Grewal. “Automating document processing, extracting the information brokers are getting to us in minutes as opposed to manually doing it … there are capabilities right now where artificial intelligence can scan files and catch inconsistencies before they delay approvals.”
As for the broker-only focused approach, it’s a strategy that has played well throughout Grewal’s career thus far, emphasizing consistent and reliable performance through an expanding network of strategic partners.
Unlike some lenders where brokers struggle to connect with decision-makers, Highclere is committed to providing direct access to its underwriting and credit teams, ensuring fast turnarounds and a more seamless experience. It is an established roadmap for success that the team is looking to replicate.
“The only way we’re going to win—and I’ve learned this after 30 years in the business – is that service and that relationship you provide to that mortgage broker will determine if you get the next deal” notes Grewal.
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Dylan Freeman-Grist Highclere Capital Lending Lender Leon Dadoun mortgage industry mortgage industry news Paul Grewal
Last modified: February 22, 2025