Mortgage Investment Corporations (MICs) are secured by real estate-backed mortgages provide investors with above average returns. Thanks to the way MICs are structured, they provide investors with a number of tax breaks.
That said, not all MICs are created equal, maturity and loan types, composition of real estate, position of the lender, loan-to-value ratio, how the portfolio is geographically diversified, deal-flow, and default or loss-loan rate will all have a significant impact on the stability and yield of the MIC.
It is because of these reasons, investors should choose Mortgage Company of Canada over other MICs.
Mortgage Company of Canada: The Better Investment
MICs pool qualified investor capital into residential and, in some cases, commercial mortgages. MIC’s essentially provide short-term (usually six months to 36 months) loans, secured by Canadian real estate. They also get those loans to homebuyers quick; where a bank can take up to two months to do its due diligence, MICs are more flexible with their lending terms and can provide loans in a matter of days or weeks.
The MIC makes money off those mortgages, which are higher than what Canada’s big banks charge, and general fees.
Because of the way MICs are structured, they do not pay income tax and have to legally distribute all of their earnings to investors in the form of annual dividends, paid monthly.
It might sound straight forward, but because of the nature of real estate and the people making executive decisions, not all MICs are created equal.
Below are just some of the reasons why investors should choose Mortgage Company of Canada over other MICs.
MCOCI Can Provide Higher Loan Amounts Most MICS Can’t
Because of its strong cash position, Mortgage Company of Canada can provide higher loan amounts than most MICs. MCOCI’s experienced management team and independent board isn’t limited by strict guidelines like other MICs.
Not Subject to the Same Strict Guidelines Banks Are
MICs are governed by Section 130.1 of the Income Tax Act, but they are not bound by the same strict guidelines that the big banks and trust companies are. As a result, Mortgage Company of Canada can provide individually tailored loans designed to meet the specific needs of its borrowers.
Clients Are High-Quality Borrowers
Because of increasingly stringent lending rules, more and more borrowers are turning to Mortgage Company of Canada. Individuals who would have had no trouble getting a mortgage or looking to renew at a bank, are being rejected. This includes those who are self-employed, debt-servicing, new immigrants, and those who have credit issues. As a result, Mortgage Company of Canada can be more selective about who it lends to. It can also charge more in interest. Additional lending rules will increase the demand for Mortgage Company of Canada which also increases the quality of the borrower.
MCOCI Can Provide Funds within 48 hours
Even if borrowers can be approved by the big banks, they are turning to Mortgage Company of Canada because of our flexibility. Banks subject their clients to lengthy due diligence processes, which can, in some cases, take up to two months. At Mortgage Company of Canada, we can provide funds within 48 hours.
Two of Canada’s Largest Banks Are Giving MCOCI Money
Two of the country’s largest banks are providing MCOCI with revolving credit facilities: TD and Royal Bank of Canada. Not only that, the two banks have steadily increased our equity loans. That is testament to the stability of our mortgage backed investments in the Greater Toronto Area and Golden Horseshoe.
Mortgage Portfolio of Over $230 Million
This strong real estate market in the GTA has provided a great platform for Mortgage Company of Canada. As a proven provider of mortgage financing, we have been able to increase the size of our portfolio to over $230 million, while simultaneously improving our overall loan quality.
Mortgages Focused on Real Estate in the GTA
MICs are legally required to hold at least 50% of its assets in residential mortgages and/or cash. The remaining assets can be held in mortgages backed by commercial property, land, industrial properties etc. Mortgage Company of Canada is focused on residential mortgages in the GTA. Very few MICs are structured this way. Real estate in the GTA is considered to be one of the most stable, reliable investments in the world.
75% of Loans are First Mortgages, 25% are Second Mortgages
Of those loans provided by MCOCI, three-quarters are made up of first mortgages while 25% are made up of second mortgages. 100% of our portfolio matures in less than one year.
Low Loan-To-Value Ratio
The loan-to-value ratio is the amount borrowed as a percentage of the value of the real estate. There are no laws saying MICs need to maintain a certain level of LTV, but most have LTVs between 70% and 85%. The lower the LTV ratio the lower the risk. This means, a MIC with a lower LTV can sustain a higher drop in real estate prices. Mortgage Company of Canada has a LTV of 68.9%.
Proven Management Team and Track Record
Mortgage Company of Canada has a proven management team with a stellar track record. We have funded approximately $545 million in mortgages and build a MIC portfolio of $226 million in less than five years. We have also delivered superior, market beating yields. The Mortgage Company of Canada management and board have combined, more than 50-years of industry experience.
High Governance and Standards
MICs are subject to a large number of high governance and investment standards, including financial reporting and shareholder tracking.
- Auditor Ernst & Young conducts annual audit and quarterly reviews
- TMX Trust appointed as third-party transfer agent
- TD Bank performs quarterly portfolio reviews on approximately 10% of our portfolio
- Governed by an independent board of directors
One of the Industry’s Best Track Records and Yields
The numbers speak for themselves. Since November 2013, MCOCI has made 58 consecutive, monthly distribution payments. We have also delivered consistently strong returns in excess of our current 9.25% annual target yield. At the end of October 2018, our trailing 12-month yield was 9.48% or 9.86% for investors in our Dividend Reinvestment Plan.
Mortgage Company of Canada: Helping You Invest in High-Yield, Private Mortgages
Since its inception, Mortgage Company of Canada has provided high-quality borrowers with uniquely tailored loans, fast. Because of our diversified portfolio of real estate backed mortgages, proven underwriting, and risk management, we have also been able to provide our investors with incredible, above average yields.
Had you invested $100,000 with Mortgage Company of Canada in 2009, by October 2018, that investment would be worth $258,658.
To find out how you can strengthen your investment portfolio with real estate backed mortgages in the Greater Toronto Area, visit our web site or contact Mortgage Company of Canada at 1- 866-318-7222.