When the average consumer thinks about a mortgage, the first thing that comes to mind is probably the Big Five Banks.
TD, RBC, Scotiabank and the like have done a great job of owning mindshare in the Canadian mortgage market.
But the Big Five are not the only lenders that mortgage brokers have access to. And thanks to the new regulations introduced earlier this year, Mortgage Investment Corporations (MIC’s) have become more relevant than ever.
Mortgage Investment Corporations were originally invented as a way for smaller investors to invest in the mortgage and real estate markets.
Prior to their inception, if you wanted to invest in a mortgage, it was typically a one to one relationship. You would lend money directly to a borrower and would carry all the risk and reward that would go with that.
MIC’s offered an alternative solution where investors could pool their funds and lend to a number of borrowers, instead of just one. Money is pooled by shareholders in the corporation, and then lent out in the form of residential or commercial mortgages, and the profit is distributed back to the investors.
Mortgage Investment Corporations comes in all shapes and sizes, with some focused on first mortgages, others on slightly more risky second mortgages, and others with a full spectrum of lending options including commercial, construction, land, and more.
If you’re looking to diversify your investment portfolio, a Mortgage Investment Corporation like Squire MIC is a great option to explore. Click here to learn more about investing in a Mortgage Investment Corporation.
How MIC’s fit into the mortgage market
The idea of the Mortgage Investment Corporation has been around for a long time, but the last few years has seen them become more relevant to the Canadian mortgage market.
The amount of money being lent out by Mortgage Investment Corporations has grown by over 13% since October 2015, and the trend is only looking to continue as regulation makes it more difficult for borrowers to access funds from traditional and alternative lenders.
Because Mortgage Investment Corporations are not regulated federally, they don’t have to apply the stress test to their mortgage deals. This makes them an attractive option to borrowers who otherwise wouldn’t qualify.
And that’s another great reason to work with a mortgage brokerage like Ardent Mortgages. Not only do we have access to the Big Five banks best mortgage rates, we also have great relationships with alternative lenders and Mortgage Investment Corporations across Ontario.
If you’ve been turned down by your bank, we can help. Click here to schedule your free consultation call today!