FAQs

A MIC, or Mortgage Investment Corporation, is an alternative investment and lending corporation that focuses on Canada’s real estate market. Shareholders in a MIC are able to invest in a diversified pool of mortgages (primarily short-term residential) without the burden of owning and managing property directly. A MIC is structured as a flow-through investment vehicle, allowing 100% of the net income to be distributed back to its shareholders. Under the Canada Income Tax Act, MIC investments can be held within a registered portfolio such as an RRSP, RESP, LIF, RRIF, LIRA, RDSP, IPP (individual pension plan), DPSP or TFSA.

MIC funds are portfolios of mortgage assets. They pool investor capital to fund a collection of mortgages with distinct attributes and characteristics. The borrower’s interest payments generate the yield for investors.

MIC funds should be carefully selected, with particular attention focused on ensuing they have effective asset management practices in place, a track record of performance, and sound risk management strategies.

CMI fully services the mortgage assets we present to investors in our MICs, with a rigorous due diligence process to effectively manage risk for investors. While MIC funds at other mortgage investment firms tend to be a single pool of a wide variety of mortgages, CMI has three distinct MIC funds. Each fund has its own risk profile as defined by the average LTV ratio for the fund, and with the corresponding yields for each. This gives our investors more control to choose the fund that best suits their investor profile.

Unlike traditional stocks and fixed income securities, MIC funds are an alternative asset class. Alternative assets are less correlated to the larger public market in the same way that stocks, bonds, and cash are. As a result, MIC funds offer investors a way to diversify their portfolio with income generating assets that aren’t subject to the same market fluctuations.

No, these investments are not guaranteed. However, CMI’s rigorous due diligence process helps to reduce risk. Our team of experienced underwriters evaluate each mortgage to carefully determine its risk, and we ensure that no mortgage makes up more than 10% of each MIC fund. Each mortgage within our MICs is monitored throughout its duration, ensuring these assets remain in good standing. This has resulted in a loan loss rate of less than 1% to date. In addition, each mortgage is backed by collateralized real estate, further mitigating risk.

CMI Mortgage Investments is our individual, whole mortgage investment program for high-net-worth investors looking to invest in a single mortgage. MIC funds, on the other hand, are a portfolio solution of mortgage assets. Investor’s capital is pooled in a fund that holds multiple similar mortgages, making them a lower risk option than investing in one of our individual mortgage investment products due to the inherent asset diversification with these funds.

Through our unique mortgage matching process at CMI Mortgage Investments, we are capable of personalizing each individual investment opportunity to suit the investment objectives of each investor. We take a thorough look at your investment preferences to ensure we match you with the right mortgage investment that suits your investment goals.

Contact Us to learn more.

When you invest in a MIC fund, you’re investing in a portfolio of mortgages as opposed to directly purchasing a single property or several properties. This can offer greater diversification than a direct real estate investment since the investment is spread out over several mortgage assets, with each asset also being backed by collateral real estate security.

CMI manages, operates and owns our three MIC funds, making it possible for investors to purchase shares in these unique investments. CMI also services each mortgage that is included in our MICs, placing them in the appropriate fund according to their specific risk and return profile.

Investors looking to purchase MIC shares need at least $5,000 to invest. MIC Funds give investors the opportunity to access the mortgage investment market with far less capital than investing directly in individual mortgage investments.

Yes. Once you complete your Know Your Client (KYC) form and we get a better understanding of your investor profile and specific investment objectives, we can recommend which of our three MIC funds would best suit your needs and investment objectives.

Our MIC products have a minimum investment term of one year. Shares may be redeemed without penalty after 12 months with 30 days’ notice. Redemptions are processed quarterly.

Yes, all of our MIC funds are RRSP, RESP, TFSA, RRIF, RDSP and LIRA eligible.

CMI has placed over $1 billion in mortgages since its inception, with a default rate of less than 1% over the past decade for our entire mortgage portfolio.

Each MIC fund targets different annual returns and loan-to-value (LTV) ratios, and thus appeals to different types of investors. All three funds consist primarily of residential mortgages, but they vary in terms of the type of mortgage assets contained within each fund.

CMI MIC Prime Mortgage Fund

• Targets annual returns of 6 – 8%*
• Has an average maximum LTV ratio of 65%
• Consists of primarily first mortgages

CMI MIC Balanced Mortgage Fund

• Targets annual returns of 8 – 9%*
• Has an average maximum LTV ratio of 75%
• Consists of a mix of first and second mortgages

CMI MIC High Yield Opportunity Fund

• Targets annual returns of 10 – 11%*
• Has an average maximum LTV ratio of 85%
• Consists primarily of second mortgages

*Class F Targets

The majority of our mortgages are on properties located in large urban centres in Ontario, Alberta and BC, although we do have mortgage investments in other areas across Canada. We concentrate on stable, high-growth residential markets with historically strong economic fundamentals.

Our team conducts ongoing research on the macro-economic influences that impact the economy and affect the mortgage market. This allows us to stay on top of the latest developments in the market and uncover unique investment opportunities in the mortgage market.

All MICs are governed by Section 130.1 of the Income Tax Act, which outlines specific rules regarding their investment mix and borrowing limits. Generally speaking, the primary investment rules are as follows:

• 50% of investments must be in residential mortgages as defined by the National Housing Act, together with cash on hand or deposits with a bank or other corporation whose deposits are insured by the Canada Deposit Insurance Corporation, Quebec Deposit Insurance Board or with a credit union.
• The cost of a single property may not exceed 25% of all of the properties in the MIC.
• MICs may only lend funds secured by Canadian real estate. They are not permitted to own properties outside of the country.
• They cannot acquire or own shares of non-resident corporations.
• MICs may not act as real estate developers or property managers.
• There must be at least 20 shareholders in the fund, and no one shareholder may own 25% or more of the issued shares.
• A MIC can leverage up to five times the cost of its assets if two-thirds of its assets are in residential mortgages and/or insured bank deposits.

All income earned through a Mortgage Investment Corporation flows directly to shareholders in the form of dividends, which are taxed in the hands of shareholders as interest income. These dividends, which represent the MIC’s yearly taxable income, must be paid out within 90 days of its year-end. Corporately, the MIC treats the dividends as company expenses, which are not taxed, allowing it to remain a tax-exempt corporation.

There is no specific maximum duration for our MIC products; they don’t mature or end after a fixed period. However, the minimum term is 12 months.

Shares are proportionate to the principal investment amount; for every dollar invested in the MIC, the investor receives a $1 preferred share. Each share entitles the investor to a share of the total yield of the MIC.

Funds are distributed on a monthly basis to a designated account via direct deposit for non-registered funds. For registered funds, monthly distributions will be directed to the appropriate trustee. Investors can choose to reinvest the monthly income through our dividend reinvestment program (DRIP).

Yes. We will send all the relevant tax slips to investors within 90 days of year-end.

A MIC, or Mortgage Investment Corporation, is an alternative investment and lending corporation that focuses on Canada’s real estate market. Shareholders in a MIC are able to invest in a diversified pool of mortgages (primarily short-term residential) without the burden of owning and managing property directly. A MIC is structured as a flow-through investment vehicle, allowing 100% of the net income to be distributed back to its shareholders. Under the Canada Income Tax Act, MIC investments can be held within a registered portfolio such as an RRSP, RESP, LIF, RRIF, LIRA, RDSP, IPP (individual pension plan), DPSP or TFSA.

Rates of return will vary depending on the MIC fund you choose to invest in, but generally range from 6 – 11%.

The dividends of each fund are determined by the interest and fees paid by each borrower, and in turn, collected by the fund. Both are influenced by the risk profile of the borrower and the type and amount of their mortgage, among other elements.

The weighted average loan to value ratio for the CMI MIC Prime Mortgage Fund is 65%, while the CMI MIC Balanced Mortgage Fund’s weighted loan to value ratio is 75%. The CMI MIC High Yield Opportunity Fund has an average LTV ratio of 85%.

Contact us to learn more about our risk mitigation strategies and how you can invest in mortgages across Canada through our suite of CMI MIC Funds.

A DRIP program refers to a Dividend Re-investment Program. It automatically re-invests the dividends from a pooled investment product like our MICs back into the fund This process increases the principal amount of your investment, thereby compounding your returns. All CMI MIC Funds have DRIP programs available to investors who would like to take advantage of this investment strategy.

Mortgage Investment Corporations, or MICs, were created in 1973 as part of the Residential Mortgage Financing Act (RMFA). Parliament believed a housing crisis was imminent due to insufficient access to mortgage financing and sought a solution to close this gap.

MICs offered a way to increase mortgage funding to finance the construction of new homes for the growing Canadian economy by accessing the accumulated wealth of smaller investors through their registered plans (RRSPs), non-registered investments and pension funds.

Although MICs have been around for a long time, they did not gain popularity until the 1990s when fixed-term deposits began to pay yields of less than 6% and investors became willing to take on more risk to meet their investment return objectives.

• Attractive return potential. MICs have benefited from Canada’s strong real estate market over the last ten years. Coupled with an active investment management philosophy and an emphasis on capital preservation, MICs can deliver attractive returns to investors looking for alternatives to traditional fixed income products.
• Low correlation to stock market volatility. Mortgage investments are not correlated to market ups and downs. Thus, they may be suitable for investors looking for investments that operate independently of the publicly traded markets.
• Secured by real assets. MIC investments are secured by collateralized real estate to boost capital preservation strategies.
• Comprehensive due diligence process. CMI’s active investment management philosophy emphasizes prudent lending and capital preservation strategies. Our rigorous mortgage underwriting and management program has resulted in the MIC managers having a loan loss rate of less than 1% to date.
• Registered plan eligible. Investments in MICs can be made within tax-sheltered plans such as RRSPs, RESP, RDSPs, RRIFs etc.
• Diversification. The MIC Funds hold a pool of residential mortgages that are diversified across a number of factors such as geography, mortgage and borrower type and investor profile.

Contact Us for more information on our MIC funds or to book an appointment with one of our CMI Investment Professionals.