You might be thinking, “What exactly is a Mortgage Investment Corporation, and how does it help people like me make money?” It’s a fair question. A lot of people want to grow their money but don’t want the daily stress of checking stock prices. That’s where a Mortgage Investment Corporation—or MIC—can be a smart choice.
What is a Mortgage Investment Corporation?
A mortgage investment corporation is a company that pools money from multiple investors and lends it out as private mortgages. Instead of buying property, you help finance it—and earn from the interest paid on those loans. MICs mainly lend to people who may not get loans from banks, like small business owners or new immigrants with solid income but no credit history.
MICs are popular in Canada, and they follow the rules set by the Income Tax Act. One big plus: MICs must return 100% of their income back to investors every year. So, you get regular returns, and the company avoids paying income tax.
Why Do People Choose MICs?
MICs are simple to understand, especially compared to other investment options. Here’s why investors like them:
1. Regular Monthly Income
The biggest reason many people invest in MICs is the steady income. Most MICs pay out every month, which is nice if you want to use that money for daily expenses or reinvest it.
2. Better Than Savings Interest
Let’s be honest—keeping money in a savings account doesn’t give much these days. MICs usually offer higher returns than fixed deposits or regular savings accounts, so your money works harder.
3. Easy to Get Started
You don’t need lakhs to begin. Many MICs let you start with a small amount, sometimes even under ₹1 lakh (in Canadian MICs, often under CAD $5,000). Also, you don’t need to manage anything on your own. No paperwork chasing or loan collections—it’s all taken care of.
4. Real Estate Backing
Every loan given by a MIC is backed by real property. That means if a borrower doesn’t pay back, the property can be sold to recover the money. It adds a layer of safety for investors.
5. Diversified Lending
Instead of putting all your money into one borrower or one property, MICs spread your investment across many loans. This lowers the risk. Even if one borrower delays payment, the others keep things stable.
How Does a MIC Work?
Let’s say you and 100 other people put your money into a MIC. The MIC then lends this pooled money to people who need home loans but can’t get them from banks.
These loans usually come with higher interest rates because they’re considered private lending. Borrowers agree to these terms because they need quick approvals or have unique situations.
Now, when those borrowers make their monthly payments—interest and sometimes principal—the MIC takes that money and shares it with you and the other investors. So, you make money from the interest the borrowers pay.
What Makes MICs Different From Other Investments?
Stocks go up and down. Real estate prices change too. But MICs focus on income, not just growth. The value of your investment might not jump overnight, but the consistent monthly payouts give peace of mind. That’s especially helpful if you’re retired or just want fixed income each month.
Also, many MICs are run by experienced mortgage professionals. They know how to pick solid borrowers, evaluate property value, and manage risks. That gives investors more comfort.
Are MICs Only for Big Investors?
Not at all. You don’t have to be rich or a finance expert to invest in a MIC. If you have some savings, want to grow your income, and prefer a low-maintenance option, this could suit you.
Also, MICs work well for registered plans like RRSPs or TFSAs in Canada. That means you can grow your money tax-free or tax-deferred, depending on the account type.
What Should You Look at Before Investing?
Before putting your money into any MIC, check a few things:
1. Track Record
Look at how long the MIC has been around and how it has performed in the past. A solid history shows stability.
2. Types of Loans
Some MICs focus on residential properties, others on commercial, or even construction loans. Choose one that matches your comfort level.
3. Management Team
Check who’s running the MIC. Are they experienced? Do they understand real estate lending? A strong team makes a difference.
4. Liquidity Terms
Some MICs let you withdraw your investment anytime, while others have fixed terms. Make sure you know how and when you can get your money back.
Final Thoughts
If you want a way to earn monthly income without daily market stress, a Mortgage Investment Corporation could be a nice choice. It connects you to the real estate market without needing to buy or manage property. You get passive income, the backing of real assets, and peace of mind.
Also, it’s a smart option if you like regular returns but want something more rewarding than a savings account or FD. With the right MIC, your money can work steadily and safely—while you focus on your life.
If you’re interested, talk to a financial advisor or check with a trusted MIC to learn more. As you know, it’s always good to understand where your money is going before you invest.
