The benefits of mortgage investing

Investing in the construction-related sector often means investing in real estate, doesn’t it. Real-estate investment and speculation is considered one of the staples of a modern economy. Historically, the price of land and buildings have always eventually gone up. So, buying and selling real estate is understandably considered a viable investment opportunity.

A lesser-known form of investing in the construction-related sector, but a potentially more viable one, is mortgages. People don’t generally associate mortgages with investing. However, if you lend someone money with the expectation of high returns, backed by the security of the collateral property, that’s a decent investment opportunity almost any way you look at it.

The Canadian example

In fact, historically speaking, investing in mortgages, especially in Canada, has come with high returns and low risk. That’s why the Canadian government has implemented measures to make mortgages more accessible to the average investor.

That’s what a mortgage investment corporation (MIC) is all about. In 1972, the Canadian federal government established federal law that created the MIC as an entity that essentially accomplished two things.

First, a MIC is literally structured as a corporation and must function as such, thus providing investors with the legal protections that come with such legal incorporation. Second, investors can invest directly in a MIC by becoming its subscribers, shareholders, bondholders — depending on how the MIC decides to specifically structure itself.

Everyone benefits

As a result, the MIC takes care of all the investment decisions, as well as the administration involved in investing in mortgages. In addition, the MIC also handles how the investors’ money is lent to mortgage borrowers.

In the end, the MIC pools mortgages together that yield high returns over the short and long term, and investors benefit by receiving a regular dividend/interest payment. It’s a very simple and elegant way of streamlining the process of investing in mortgages so that everyone benefits alike: investor, borrower, and MIC.

ASCEND MIC is a mortgage investment corporation that specializes in offering investors high returns at low risk in Canada’s mortgages market. Please contact us to learn more.