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How Individual Mortgage Investments Can Fit into Your Portfolio

29 March 2022


Canadian investors have long valued real estate as a desirable investment option. Steady cash flow, diversification benefits and compelling returns are just some of the advantages of gaining exposure to this asset class. Investors are realizing investing in the Canadian housing market without having to buy property or become a landlord is increasingly making sense.


Mortgages are increasingly being viewed as attractive investment options in the wake of the COVID-19 pandemic. As relatively lower interest rates and rising inflation erode returns on investment for traditional fixed income assets, mortgage investments offer an alternative strategy for generating cash flow while preserving capital and purchasing power.


Individual Mortgage Investing Explained

Mortgage investments are fixed income assets that deploy capital for the purpose of lending to borrowers who’ve turned to a private lender for financing. Alternative, or private lenders, represent a growing share of mortgages in Canada. According to the Bank of Canada, the share of outstanding mortgages issued by Mortgage Investment Corporations (MICs) has doubled since 2017, now accounting for 1.4% of all mortgages.[1]


Where MICs invest in a pool of private mortgages, individual mortgage investing is the purchase of one specific mortgage. This makes them suitable for high net-worth individuals with a minimum of $500,000-$1,000,000 to invest. For lending their capital, these investors receive payments in the form of interest and fees charged to the borrower. Many of these mortgage investment programs are administered by companies who manage the entire investment process, including sourcing investment opportunities, underwriting and administering them on behalf of both the borrower and investor.



How do I incorporate mortgages into my investment portfolio?

The first step is identifying a professional manager with a proven track record in managing mortgage investments. Information such as successful mortgage placements, years of operation and investment strategy should all be carefully evaluated before selecting a mortgage investment company.


Mortgage investments are part of an effective diversification strategy by providing higher-yield opportunities in a market that is generally uncorrelated with traditional stocks and bonds. Individual mortgage investments can generate anywhere between 6% to 14% annually, depending on their risk profile. That’s significantly higher than conventional fixed-income assets such as government bonds. Mortgage managers who place a strong emphasis on geographic diversification and capital preservation through rigorous due diligence and risk management processes often have the best track record.


Like any investment strategy, mortgage investments should be customized to meet an investor’s risk profile, time horizon and investment objectives. A professional mortgage investment manager can help you structure your portfolio according to your specific needs and preferences.



Putting CMI To Work for You

CMI Financial Group is one of Canada’s fastest-growing non-bank financial service providers, having recently surpassed $1 billion in cumulative mortgage funding.[2]

Within CMI, CMI Mortgage Investments is our individual mortgage investment group, geared to high net-worth individuals, and investing in residential mortgages exclusively within Canada. Our investment process emphasizes transparency; each mortgage deal is presented to our investors as a comprehensive package that includes details about the borrower, the financing terms, and the underlying property for the mortgage.

Contact one of our Investment Managers today for a free consultation, and learn more about our investment process, and how we can help you better understand mortgage investments as a part of your investment portfolio.


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