What is a Mortgage Investment Corporation (MIC)?
A Mortgage Investment Corporation (MIC) is a uniquely Canadian structure that offers investors a way to participate in the private mortgage market without the hassle of sourcing, underwriting, or managing loans themselves. Governed by Section 130.1 of the Income Tax Act, MICs serve as pooled investment vehicles that fund residential and commercial mortgages—primarily those that fall outside the scope of traditional lenders like banks and credit unions.
At their core, MICs provide investors with exposure to an alternative asset class: real estate-secured lending. These vehicles are especially appealing for their ability to generate steady income, often in the form of monthly or quarterly dividends, while offering portfolio diversification beyond traditional equities and bonds.
Advanced MIC offers an alternative investment option that helps mitigate risk through minimal correlation to public markets, delivering genuine diversification to your portfolio. Reach out to us today to explore if Advanced MIC is the right fit for your investment goals.
How MICs Work
MICs, including Advanced MIC raise capital by issuing preferred shares to investors. These funds, along with additional capital that the MIC may borrow, are used to fund a diversified pool of mortgages. Rather than investing in a single mortgage and bearing the full risk of default, shareholders in a MIC benefit from a more balanced and professionally managed portfolio.
These mortgages are typically short-term and often serve borrowers who are unable to qualify through traditional channels. This may include self-employed individuals, borrowers with unconventional income, or developers requiring construction financing.
Key Characteristics of MICs
MICs are specialized investment vehicles governed by Canada’s Income Tax Act. These corporations pool investor capital to fund diversified portfolios of residential and commercial mortgages, delivering consistent returns with lower correlation to traditional asset classes like stocks or bonds.
1. Special Tax Treatment:
MICs are flow-through entities, meaning they don’t pay corporate income tax as long as 100% of their taxable income is distributed to shareholders. Investors are taxed on this income at their personal rates, avoiding double taxation.
2. Regulatory Oversight:
While MICs are not regulated as banks, they must adhere to corporate governance standards and securities regulations. Financial statements are audited annually, and shareholder limits are imposed—no single investor can own more than 25% of the shares, and there must be at least 20 shareholders.
3. Residential Mortgage Focus:
At least 50% of a MIC’s assets must be invested in residential mortgages. While MICs can hold real estate and other assets, they cannot engage in property development or construction, preserving their role as lenders, not builders.
What Types of Mortgages Do MICs Fund?
- First and second mortgages
- Bridge financing
- Construction loans
- Refinance options
- Equity takeouts
How Investors Benefit
Investors in a MIC earn regular income from interest and fees collected on the mortgage portfolio. This income is paid out as dividends, often monthly or quarterly. MICs are especially appealing for income-focused investors seeking alternatives to low-yield fixed income products.
Because MIC shares qualify for inclusion in registered accounts, many investors use MICs to grow wealth within RRSPs, TFSAs, or RRIFs—earning interest income on a tax-deferred or tax-free basis.
Final Thoughts
MICs represent a powerful tool for investors seeking consistent, income-generating alternatives to traditional markets. With their regulatory framework, transparency, and ability to serve niche borrower segments, MICs play a vital role in Canada’s private lending ecosystem. For those looking to diversify their portfolios, generate passive income, or access the real estate lending space without the hands-on work, a Mortgage Investment Corporation offers a compelling and efficient solution.
As with any investment, it is important for individuals to conduct their own due diligence, understand the risks involved, and seek professional advice as needed before committing capital.
Contact a Dealing Representative today to learn how you can start investing with confidence and achieve consistent returns.
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This document does not constitute an offering of securities. The securities are offered exclusively through an Offering Memorandum provided by Advanced Capital Corporation, a registered dealer, in compliance with applicable securities laws. The information contained in this summary is incomplete and is provided for informational purposes only. The financial returns discussed herein are target projections and may not accurately predict future performance. Investors are encouraged to review the full Offering Memorandum and consult with a financial advisor before making any investment decisions.
