What is a Mortgage Investment Corporation (MIC)?

A Mortgage Investment Corporation is a Canadian entity created under the Income Tax Act that pools investor capital to fund mortgages. MICs earn income from the interest and fees charged on those mortgages, then distribute the net income to shareholders. For investors, MICs offer exposure to real estate lending (typically 5%–10% annual returns) without directly managing properties. For borrowers, MICs provide alternative mortgage financing — often for borrowers who do not qualify at banks (poor credit, non-standard properties, short-term needs).

Are MIC investments safe?

MIC investments carry real risk. While the mortgages are secured by real estate, you can lose money if borrowers default and the underlying property values have declined. MICs are not covered by CDIC deposit insurance. Returns depend on the quality of the mortgage portfolio — a MIC that lends primarily first mortgages at 60% loan-to-value is much safer than one doing second mortgages at 80% LTV. Always review the MIC lending criteria, default rates, and management track record before investing.

How are MIC distributions taxed?

MIC distributions are taxed as interest income — the least favourable type of investment income for tax purposes. Unlike Canadian dividends (which get the dividend tax credit) or capital gains (50% inclusion), MIC payments are added 100% to your taxable income. This means the after-tax return is significantly lower than the headline yield. MICs are RRSP, TFSA, and RRIF eligible, which makes them most tax-efficient when held inside registered accounts.

What is the difference between a MIC and a syndicated mortgage?

A MIC pools investor money and the MIC manager decides which mortgages to fund — investors own shares in the MIC, not individual mortgages. A syndicated mortgage is a single mortgage funded by multiple investors who each own a fractional interest in that specific mortgage. MICs offer diversification across many mortgages; syndicated mortgages concentrate your risk in a single property. Syndicated mortgages have been associated with significant investor losses and fraud in Canada and face stricter regulation as securities.

Can I borrow from a MIC instead of a bank?

Yes. MICs lend to borrowers who may not qualify at banks — those with poor credit, self-employment income, tax arrears, short-term bridge needs, or non-standard property types. MIC mortgage rates are higher than bank rates (typically 7%–12%) and come with lender fees (1%–3% of the mortgage amount). MIC mortgages are typically short-term (1 year) and should be used as a bridge to improve your situation and qualify for cheaper financing.

Mortgage Investment Corporations (MICs) in Canada: How They Work for Investors and Borrowers (2026)

Mortgage Investment Corporations sit at the intersection of investing and alternative lending. For investors, they offer regular income from mortgage interest. For borrowers, they provide financing when banks say no. Here is how both sides of the equation work.

How a MIC works

A MIC is structured as a corporation under the income tax Act (Section 130.1) that exists specifically to invest in mortgages.

The flow of money

Investors → Buy MIC shares → MIC pools capital → Funds mortgages → Borrowers pay interest → MIC distributes income → Investors

Participant	Role
Investors	Buy shares in the MIC. Receive regular distributions from mortgage interest income
MIC manager	Selects which mortgages to fund, manages the portfolio, handles collections and defaults
Borrowers	Receive mortgage financing from the MIC. Pay interest and fees higher than bank rates
Mortgage brokers	Originate the loans — find borrowers and submit applications to the MIC

MIC requirements under the Income Tax Act

To qualify as a MIC, the corporation must:

Requirement	Details
At least 20 shareholders	Cannot be a small private investment club
No single shareholder owns > 25%	Prevents concentration of ownership
50%+ of assets in Canadian mortgages	Must be primarily a mortgage lender
Distribute 100% of net income	No income retained — all passed to shareholders (flow-through structure)
Only invest in Canadian residential mortgages, cash, or insured deposits	Limited investment mandate

MICs for investors

Typical returns

MIC Category	Typical Annual Return	Risk Level	LTV Range
Conservative (first mortgages, low LTV)	5%–7%	Lower	50%–65% LTV
Balanced (first mortgages, moderate LTV)	7%–9%	Moderate	65%–75% LTV
Aggressive (second mortgages, higher LTV)	9%–12%+	Higher	75%–85% LTV including prior charges

Returns are generated from:

Interest income — Borrowers pay 7%–12%+ on MIC mortgages
Lender fees — 1%–3% upfront fee on each mortgage funded
Renewal fees — Fees charged when short-term mortgages renew

Minus: management fees (typically 1%–2% of assets), bad debt provisions, and operating costs.

Tax treatment

MIC distributions are treated as interest income for tax purposes:

Income Type	Tax Treatment	Effective Tax Rate (Top Marginal, Ontario)
MIC distributions	100% taxable as interest income	~53.5%
Canadian dividends (eligible)	Dividend tax credit applies	~39.3%
capital gains	50% inclusion rate	~26.8%
Return of capital	Tax-deferred (reduces ACB)	Deferred

At top marginal rates in Ontario, a 7% MIC yield nets approximately 3.3% after tax in a non-registered account — compared to 4.3% from a Canadian dividend at the same gross yield. This makes registered accounts (RRSP, TFSA, RRIF) the optimal place to hold MIC investments.

Risks for MIC investors

Risk	Description
Default risk	Borrowers may stop paying. The MIC must foreclose and sell the property
Real estate market risk	If property values decline, foreclosure recoveries may not cover the outstanding mortgage
Concentration risk	Some MICs are concentrated in specific geographies or property types
Liquidity risk	MIC shares are not publicly traded. Redemption may be restricted to specific windows (quarterly, annually)
Interest rate risk	Rising rates may increase defaults while potentially improving yields on new mortgages
Management risk	Returns depend on the skill and integrity of the MIC manager in selecting and managing mortgages
Regulatory risk	Changes to mortgage regulation could affect MIC lending practices

Due diligence checklist for MIC investors

Before investing in a MIC, evaluate:

Factor	What to Check
Track record	How many years in operation? Historical returns vs defaults?
Portfolio LTV	Average and maximum LTV of mortgages? First vs second mortgages?
Geographic concentration	Where are the properties located? Over-concentrated in one market?
Mortgage types	Residential vs commercial? Urban vs rural? New construction vs established?
Default rate	Historical default rate? How are defaults resolved?
Redemption terms	How quickly can you get your money out? Redemption fees?
Management fees	What percentage of assets or income goes to management?
Audited financials	Are statements audited by a reputable firm?
Securities registration	Is the MIC registered as an issuer with provincial securities regulators?
Minimum investment	Typically $5,000–$50,000

MICs for borrowers

Who borrows from a MIC?

MICs serve borrowers who cannot get financing from A-lenders or B-lenders:

Borrower Profile	Why Banks Say No	MIC Solution
Poor credit	Below 500 credit score	MIC focuses on equity, not credit
Self-employed (hard to prove income)	Insufficient documented income	Stated income with equity cushion
Recent bankruptcy	Banks require 2+ years post-discharge	MIC may approve immediately after discharge
Tax arrears / CRA debt	Banks reject	MIC may approve and CRA debt can be paid from mortgage proceeds
Non-standard property	Rural, mixed-use, land, construction	MIC has broader property acceptance
Short-term bridge financing	Bridge between sale and purchase	MIC specializes in short-term
Second mortgage	Banks rarely do seconds	MIC commonly funds seconds

MIC mortgage costs

Cost	Typical Range
Interest rate	7%–12% (first mortgage), 10%–15%+ (second mortgage)
Lender fee	1%–3% of mortgage amount (deducted from advance)
Broker fee	1%–2% (may be additional or included in lender fee)
Appraisal	$300–$500 (borrower-paid)
Legal fees	$1,000–$2,000 (borrower-paid)
Term	Typically 1 year (renewable)
Maximum LTV	65%–75% (first mortgage), 80%–85% (combined with first)

Cost example: $300,000 first mortgage from a MIC

Item	Amount
Interest rate	9%
Annual interest	$27,000 ($2,250/month)
Lender fee (2%)	$6,000
Broker fee (1%)	$3,000
Legal + appraisal	$1,800
Year 1 total cost	$37,800
Net funds received	$289,200

Major Canadian MICs

MIC	Location	Focus	Minimum Investment
Firm Capital MIC	Toronto	Urban first mortgages, Ontario focused	Publicly traded (TSX: FC)
Trez Capital	Vancouver	Senior and subordinate real estate debt	Accredited investors, $25,000+
Romspen Investment Corporation	Toronto	Commercial and residential mortgages	Accredited investors, $50,000+
Atrium Mortgage Investment Corp	Toronto	Primarily first mortgages in urban Ontario	Publicly traded (TSX: AI)
Canadian Western Trust MICs	Various	Various regional MICs	Varies
Calvert Home Mortgage	Toronto	Ontario residential first mortgages	$5,000+
Fisgard Capital	Victoria	BC and Ontario focus	Varies by series

Note: Publicly traded MICs (Firm Capital, Atrium) offer daily liquidity through the stock exchange but their share prices fluctuate with market conditions. Private MICs typically offer quarterly or annual redemption windows.

MIC vs other fixed-income investments

Investment	Typical Return	Liquidity	Risk	Tax Treatment
GIC (5-year)	3.50%–4.50%	Locked until maturity	Very low (CDIC insured)	Interest income
Government bonds	3.00%–4.00%	Daily (if held in ETF)	Very low	Interest income
Corporate bonds	4.00%–5.50%	Daily (if held in ETF)	Low to moderate	Interest income
MIC (conservative)	5.00%–7.00%	Limited (redemption windows)	Moderate	Interest income
MIC (aggressive)	8.00%–12.00%	Limited	Higher	Interest income
REIT	4.00%–8.00%	Daily (if publicly traded)	Moderate	Mixed (eligible dividends, capital gains, ROC)

MICs fill a niche: higher yields than traditional fixed income, but with less liquidity and more risk. They make sense as a portfolio diversifier — not a core holding.

The bottom line

MICs serve two distinct audiences. For investors, they offer predictable income from mortgage lending at yields above traditional fixed income — but with real credit and liquidity risks that demand careful due diligence. For borrowers, MICs provide a lifeline when traditional lenders decline the application — but at rates and fees that make them a short-term solution, not a permanent one. In both cases, understanding the specific MIC’s portfolio quality, management, and terms is essential.