Investing in Mortgages in Toronto
Ways of Investing in Mortgages in Toronto
With the resource-heavy Toronto Stock Exchange performing poorly and Canadian real estate at record levels, investors know where they want to park their money. Unfortunately, most Canadians are underexposed to real estate as an investment class. And investing in real estate can be an expensive endeavour.
A great way to take advantage of Toronto’s record housing market is to consider investing in Canadian residential real estate mortgages. While most wouldn’t consider investing in private mortgages, if you have money in the bank, you are already investing in mortgages.
This is because large financial entities invest their assets (which is really the money you have saved in a bank) in residential mortgages. However, with interest rates at near zero, you aren’t really making much on those investments. The banks are though, but there is a better way to invest your money: private mortgages.
Below are three mortgage investments vehicles you can invest in.
Direct Mortgage Investment: In a direct mortgage investment, you act as a private lender and provide all of the necessary funds to a borrower. Essentially, you are acting like a bank. You set the interest rate and repayment terms and you also assume all of the risk.
Syndicate Mortgage Investment: In a syndicate mortgage investment, you pool your money together with a number of other lenders. Like a direct mortgage investment, you set up the lending terms and receive a monthly payment from the borrower.
Mortgage Investment Corporation (MIC) A MIC is an investment company created under the Income Tax Act and allows people to invest in private residential and other mortgages. A MIC must legally pay 100% of its annual net income to shareholders in the form of dividends. You can elect to take the annual dividend or reinvest your money for additional shares.
MCC – Private Mortgage Investing Solutions
Mortgage Company of Canada (MCC) is a privately owned company with more than 75 years of key industry experience and offers investors the opportunity to invest in an alternative investment class of a diversified, secure portfolio, and professionally managed Canadian real estate mortgages.
We specialize in lending to underserved sectors of the mortgage market in the Greater Toronto Area (GTA), typically those underrepresented by traditional financial institutions. That includes those who have bad credit, unsteady income, or are self-employed.
Thanks to a strong jobs market and increasing demand for property, real estate in Toronto is expected to remain a secure investment. Stricter lending rules also mean that private mortgages will continue to gain popularity with a growing number of those in the GTA.
As an alternative investing strategy, the MCC MIC has been generating consistently positive returns and has never missed a dividend payment.
How Can You Invest?
In order to make an investment with MCC, you need to qualify as an “Accredited Investor” as defined in National Instrument 45-106. To qualify as an accredited investor, you must meet at least one of the following criteria (all figures are in Canadian dollars):
- Your net income before taxes was more than $200,000 in each of the last two calendar years, and you expect it to be more than $200,000 in the current calendar year.
- Your net income before taxes combined with your spouse’s was more than $300,000 in each of the last two calendar years, and you expect your combined net income before taxes to be more than $300,000 in the current calendar year.
- Either alone or with your spouse, you own more than $1 million in cash and securities, after subtracting any debt related to the cash and securities.
- Either alone or with your spouse, you have net assets worth more than $5 million.
Accredited investors may subscribe to common shares of the Mortgage Company of Canada at a minimum investment value of CDN$25,000. Shares may be purchased directly or through a registered plan such as an RRSP, RRIF, TFSA, RESP or RDSP, or through any combination thereof.
To find out how you can diversify your investment portfolio with Canadian real estate, contact Mortgage Company of Canada by phone at 905-886-5352 or 866-318-7222 or by email at investor.relations@mcoci.com.