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What is a Mortgage Investment Corporation (MIC)?

Updated: Nov 29, 2023


In the world of real estate financing, Mortgage Investment Corporations (MICs) have gained popularity as an alternative investment option. A Mortgage Investment Corporation is a unique type of investment entity that pools funds from multiple investors to invest in mortgages secured by real property. This article aims to explain the basics of a Mortgage Investment Corporation, its workings, and the potential benefits and risks associated with investing in one.


What is a Mortgage Investment Corporation (MIC)?

A Mortgage Investment Corporation, commonly known as a MIC, is a Canadian-based investment vehicle. It operates as a mortgage lender, specializing in providing mortgage loans to borrowers secured by real estate properties. These mortgages can be residential, commercial, or even construction loans, offering investors a diversified exposure to the real estate market.



Check this video, where our directors share their insights about mortgage investment corporations.






How do Mortgage Investment Corporations Operate?

MICs are governed by Canadian tax rules, requiring them to distribute a substantial portion of their income to investors regularly.


Typically, at least 50% of the MIC's annual net income must be distributed to shareholders, qualifying them for specific tax advantages. This aspect often makes them appealing to income-seeking investors, such as retirees or those seeking stable cash flow.


Investors in a Mortgage Investment Corporation can purchase shares or units of the corporation, becoming indirect beneficiaries of the mortgages it holds. These shares represent a proportional interest in the overall mortgage portfolio. As the MIC collects mortgage payments from borrowers, it distributes the net income to its shareholders based on the number of shares they hold.



Advantages of Investing in a Mortgage Investment Corporation:

  1. Steady Income: MICs generally aim to generate consistent and predictable income streams, making them attractive for investors seeking regular cash flow.

  2. Diversification: By pooling funds from various investors, MICs offer diversification across multiple mortgages, reducing exposure to individual borrower defaults.

  3. Real Estate Exposure: Investing in a MIC provides an opportunity to participate indirectly in the real estate market without the need for direct property ownership.

  4. Tax Efficiency: The tax structure of MICs allows for favorable treatment, potentially resulting in tax advantages for investors compared to other investment vehicles.


Risks to Consider:

  1. Interest Rate Risk: Changes in interest rates can affect the performance of the mortgage portfolio and subsequently impact the returns to investors.

  2. Credit Risk: Although MICs aim to mitigate credit risk by diversifying their mortgage holdings, there is always the possibility of borrower defaults affecting the overall portfolio.

  3. Liquidity Risk: Shareholders may face challenges selling their shares if the MIC lacks a liquid secondary market.

  4. Market Fluctuations: Real estate markets are subject to fluctuations, which can influence property values and borrower behavior.



Mortgage Investment Corporations provide a compelling investment option for those seeking steady income and indirect exposure to the real estate market. Their unique structure, tax benefits, and potential for diversification make them an attractive choice for certain investors. However, like any investment, it's crucial to carefully assess the risks and conduct due diligence before investing in a Mortgage Investment Corporation. As with any financial decision, seeking advice from a qualified financial advisor is highly recommended to determine if a MIC aligns with your investment goals and risk tolerance.

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