A Mortgage Investment Corporation (MIC) is an investment and lending company that is designed specifically for primarily residential mortgage lending in Canada. Investing in a MIC gives you shares in the company and enables you to invest in a diversified and secured pool of mortgages.

The shares can even qualify as registered eligible investments, meaning you can use them to invest your RRSPs, RRIFs, TFSAs, or RESPs, etc.

In many cases the mortgage investment corporations can offer double-digit returns and a good income stream. The MICs are alternative fixed income investments and are becoming more popular because of their sustained returns.

Not all MICs are created equal

Risk factors to keep in mind include whether or not the MIC is too geographically concentrated, for instance, if all loans are in Northern Alberta, the loans could be extremely impeded if oil commodity prices drop and homeowners are left unemployed and forced into foreclosure; if the MIC is highly leveraged this may be a bad sign. You don’t want to invest in a MIC that’s boosting their returns through leverage – the returns should come from their portfolio of holdings, and the leverage used to establish solid holdings for long-term performance; check whether or not the Mortgage Investment Corporation has policies limiting the maximum percentage or total dollar amount that can be invested in any one mortgage or borrower.

If you are interested in MICs, remember that you don’t make money on the appreciation of the shares you own. You earn a dividend-like payout monthly (sometimes only quarterly or yearly) based on the interest collected from the pool of mortgages owned by the MIC. Thus the more shares you own, the larger the payout, which is taxed at your top tax rate as interest income.

For those interested in private placement MICs, corporations that sell shares through Offering Memorandum, there are hundreds of MICs in Canada to consider. For accredited investors, there is ample choice and MICs can be found operating in almost every province.Make sure you examine the investor promotional materials thoroughly. Most important factors: consistency, longevity and a lower risk profile for sustained returns.

Another option for investors with a lower amount to invest is through the stock market. A list of a few publicly-traded MICs to consider:

Atrium Mortgage Investment Corp. (TSX: AI)

Eclipse Residential Mortgage Investment Corp. (TSX: ERM)

Firm Capital Mortgage Investment Corp. (TSX: FC)

First National Mortgage Investment Fund (TSX: FNM.UN)

MCAN Mortgage Corp. (TSX: MKP)

ROI Canadian High Income Mortgage Fund (TSX: RIH)

ROI Canadian Mortgage Income Fund (TSX: RIL)

ROI Canadian Real Estate Fund (TSX: RIR)

AssetMill also has access to a Mortgage Investment Corporation through our own Dominion Lending brokerage that invests in second mortgages on Greater Toronto Area (GTA) homes. If you are interested in hearing how you can earn around 9% returns on your retirement savings or even how to use the idle equity in your home to generate hundreds of dollars each month, contact us.