Residential mortgage credit has expanded significantly over the past decade, driven largely by record-low interest rates and strong demand for housing. Although mortgage lending in Canada is mainly facilitated by major banks and credit unions, private mortgage lenders have emerged as an attractive and increasingly popular financing source. Unlike the banks, whose underlying business has been affected by increasingly stringent guidelines and rising interest rates, private lenders continue to serve a growing demographic of borrowers who require – or simply prioritize – flexibility and a quicker approval process.
Private mortgages are one of the fastest-growing alternative investment programs in Canada, often attracting high-net-worth investors who prioritize cash flow, competitive returns, and portfolio diversification through defensive or passive investment strategies., accounting for over 10% of the province’s overall mortgage market, according to the Financial Services Regulatory Authority of Ontario. Across Canada, mortgage investment entities and private lenders account for roughly 1.6% of the overall market.
The two main types of mortgage investment programs in Canada are whole mortgage investing and Mortgage Investment Corporations (MICs). Both programs offer competitive rates of return and are suitable for cash-flow-focused investors but differ with respect to capital requirements and portfolio construction. Whereas MICs invest in a pool of residential mortgages, whole mortgage investment programs involve funding an entire mortgage transaction or multiple transactions. Before an investor decides which program to pursue, they must carefully evaluate mortgage investment providers. In Canada, the best mortgage investment partners offer dedicated whole mortgage and MIC programs that are managed in-house by an experienced team of mortgage lending and investment experts.
How to Choose a Private Mortgage Investment Partner
Not all private mortgage lenders are created equal. Before investing in a mortgage program, investors must consider the lender’s reputation, track record, investment strategies, risk management and due diligence practices, and terms and restrictions. In other words, they must “look behind the scenes” to determine how the lender makes credit adjudication decisions and manages all risks and outcomes in their portfolios. It’s also important to evaluate whether the mortgage investment partner possesses in-house resources to manage the entire mortgage origination, underwriting and administration process.
When it comes to mortgage investing, experience isn’t just limited to years of service but also includes total funds deployed. The best mortgage lenders have a proven track record of successful mortgage placements with portfolios that are geographically diversified and have a history of meeting their yield and distribution goals. These lenders typically operate as non-bank financial conglomerates that offer multiple investment programs geared toward individuals with various goals and risk tolerances. Because mortgage assets fall under fixed income, they often meet the needs of investors who prioritize safety and capital preservation. Also, because mortgages are not correlated with public debt and equity markets, they are considered defensive investments and offer a reprieve from market volatility. Successful mortgage lenders offer competitive rates of return across MIC and wholesale mortgage programs.
The CMI Difference
CMI Financial Group has emerged as one of Canada’s fastest-growing non-bank financial service providers. In June 2023, CMI reached $2 billion in lifetime mortgage placements – fortifying its place among the leaders in Canada’s private residential mortgage market.
What sets CMI apart from other mortgage lenders is our commitment to our clients and partners. Since its inception e, CMI has embraced new technologies, built relationships and established industry-leading due diligence practices, which have strengthened our reputation and relationship with our investors.
Unlike most private mortgage lenders, CMI is not exclusively a MIC – we are a financial conglomerate comprised of four interrelated companies working collectively to originate, underwrite, fund and service private mortgages in an end-to-end solution for mortgage brokers and investors. Our brokerage roots allow us to have a unique, exclusive broker focus, which drives deal volume and quality across our whole mortgage and MIC programs. CMI has built strong relationships with brokers across Canada, which allows us to focus on providing high-quality, well-underwritten files. Our mortgage portfolio has a national footprint, emphasizing geographic diversification across Ontario, Alberta, British Columbia, as well as Quebec and the Maritime provinces.
CMI has built an award-winning reputation for transparent, fair and ethical lending practices. Combined with our industry-leading due diligence practices, our team of mortgage underwriters ensures that every mortgage meets our high standards for quality and security. We focus on strong, stable real estate markets in major urban centres and thoroughly analyze underlying market fundamentals. Our risk management and due diligence processes select for high-quality mortgages at the individual and aggregate levels, allowing investors to benefit from our vast broker partner network and personalized portfolio management solutions.
Among private mortgage lenders, CMI is also known for its innovation – we are one of the only private lenders that has a comprehensive, in-house program that connects mortgage origination, adjudication, underwriting and administration. This allows us to reap economies of scale, keep expenses low and pass along higher yields to investors. Our mortgage programs have historically delivered annual yields between 6% and 16%.
In addition to our award-winning track record, CMI has built strong and well-established investor relationships, which has placed us at the forefront of the private mortgage financing boom. Our relationships have been instrumental during periods of uncertainty and have allowed us to continue growing even when other lenders have been forced to freeze applications.
Despite current economic and financial conditions, CMI remains on track to continue scaling operations. Our commitment remains focused on meeting the evolving mortgage financing needs of Canadians and our recent milestone demonstrates our growth regardless of market conditions.
If you’re investing for cash flow, capital preservation or growth, CMI has a mortgage investment program for you. Contact us today to learn about our industry-leading investment solutions. CMI is committed to working with investors and providing solutions for their specific needs and goals.