Since the beginning of the pandemic, the real estate market in Ontario has experienced fluctuations in interest rates. This has many Canadians curious about mortgage investing. Mortgage investment services in Ontario include mortgage investment corporations (MICs), which are considered private lending institutions that manage your investments. First, let’s take a closer look at how MICs operate, and then we’ll list 5 important things you should know about mortgage investing.


How do mortgage investment corporations work?

Think of mortgage investment corporations (MICs) as one big pool of capital where you and other people invest money in private mortgages in Canada. The MIC’s management is responsible for managing the investments and distributing funds into mortgages or real estate equity.

If you decide to invest money in a mortgage investment corporation, you should find a fund that fits a risk level you are comfortable with. From there, you put your trust in the MIC’s management to decide how to disperse your investment funds into mortgages. Now, let’s discuss 5 important things you should know about mortgage investment services in Ontario.

1. High Returns Are Not Guaranteed

In the initial stage of investing in a mortgage investment corporation, they might say that they guarantee high returns. However, it is important to note that these are considered false promises. Generally speaking, with housing prices fluctuating constantly, your investment is at risk of fluctuating as well.

2. MICs Offer TFSA or RRSP Deposits

When you invest in an MIC, your shares can be held in a registered account such as a TFSA, RRSP, RRIF, or RESP. As a shareholder, you are eligible for dividend payouts from your investment. Keep in mind that MICs are not legally bound to pay income tax and are obligated to disperse their earnings to you and other shareholders.

3. You Have to Pay Management Fees

Keep in mind that whenever you invest money in a mortgage investment corporation, you have to pay a management fee. Be sure to ask how much a management fee is going to cost you and if it’s charged semi-annually or annually.

4. Go Solo in Mortgage Investing

If you’ve been in the investment game for some time now and you’re confident in your own abilities, you can try mortgage investing on your own. However, we don’t recommend it, as going solo in mortgage investing takes up a lot of time and you constantly have to keep up with complying with government regulations.

5. Work With a Broker Instead of an MIC

If you have saved a large amount of money and don’t want to invest it in a mortgage investment corporation, then working with a mortgage investment broker is your best bet. Working with a broker who specializes in mortgage investing can introduce you to a selection of investment opportunities that you might not get with a mortgage investment corporation.

If you would like to submit an application for mortgage refinancing in Ontario, here at Northwood Mortgage we have various mortgage solutions that suit your financial situation. We recommend scheduling a free consultation with one of our Northwood Mortgage brokers in Toronto by calling 416-969-8130 or toll-free at 888-492-3690 or contact us here.