Mortgage Investment Corporation (MIC) is a non-bank based investment company controlled by a diverse group of shareholders who invest in a mortgage pool. Mortgage loans are backed by an underlying real estate owned by the mortgage borrower, also known as collateral.
Since non-bank mortgage interest rates are generally higher than bank mortgage rates, this is why MICs charges high interest rates. As a result, private mortgage investors tend to earn significantly larger investment returns than other fixed-income investments such as GICs, bonds, and preferred shares.
MIC is mostly for investors seeking:
- Capital preservation and tax efficiency
- Regular income distribution
- Moderate growth potential.
- Portfolio diversification
- Dividend reinvestment options
What Risks Are Accompanied With Investing In A MIC?
Although real estate and mortgage investments are typically regarded as one of the safer investments, they still come with some added risks.
A variety of factors can affect property value, including overall economic conditions, local real estate markets, competition from other available properties, and the property’s appeal to purchasers. Although its advised to seek an independent assessment or comparative market analysis before funding any mortgage loan, this evaluation or analysis cannot imply what will happen in the real estate market after funding.
If a large number of borrowers default on their debts, an MIC may be unable to distribute payments to its shareholders. To manage these risks and lower the likelihood of non-performing loans, MICs implement a stringent underwriting process. They evaluate not only the underlying real estate against which they are financing, but also each potential borrower’s credit score, sources of income, and ability to repay. Furthermore, strict loan-to-value guidelines boost the possibility that sufficient equity exists to recover outstanding loan sums in the event of a foreclosure.
What Distinguishes MIC Investment From Publicly Listed Stocks?
In Canada, companies you invest in are not permitted to issue securities unless they file a prospectus, which may be a costly process that dramatically increases the cost of capital.
Private capital investments differ from public capital investments in that they can be purchased without a prospectus. These exemptions provide Canadians with access to a distinct investment class that behaves and performs differently than the typical investments that most retail investors include in their portfolios. Many institutional investors have used this method for years to diversify their portfolios. MICs can provide investors with physical assets as well as specialized capital for one-of-a-kind investment possibilities.
Invest In Mortgages With Versa Platinum
Versa Platinum is a leading Mortgage Investment Corporation (MIC) in Abbotsford, specializing in providing borrowers with financing solutions for residential and commercial real estate and mortgage investment solutions for potential borrowers across British Columbia. Earn consistent returns up to 13.96% by investing in our mortgage pool. Minimum investment of just $10,000 needed to become a mortgage investor. For more details, give us a call today.
