MIC mortgages explained: how mortgage investment corporations lend, and what to ask

Short answer: A mortgage investment corporation (MIC) is a company that pools investors' money to lend through mortgages, and under the Income Tax Act it has to meet tests on its shareholders, its assets and its borrowing to keep its special tax treatment ^[1]. For a borrower, a MIC is a private lender: it may say yes when a traditional lender says no, usually at a higher cost and on shorter terms, so you need a clear exit plan ^[2][3]. In Ontario, FSRA expects entities that deal or lend in mortgages with individual consumers to be licensed ^[3].

This guide explains how MICs work from a borrower's point of view, what they typically look at, what they cost, and the questions to ask before you sign. It's general information; 8Twelve does not fund second or private mortgages; we arrange them with third-party lenders, OAC.

What is a MIC, and how does it lend?

The Income Tax Act sets out what a corporation must be, throughout a tax year, to qualify as a MIC. A few of the tests that matter for understanding how one behaves ^[1]:

• It's a Canadian corporation whose only undertaking is investing funds; it can't manage or develop real property.
• It has at least 20 shareholders, and no one holds more than 25% of any class of shares.
• At least 50% of its property is residential mortgages, insured deposits and cash.
• Real property it owns can't exceed 25% of its assets (apart from property acquired through foreclosure after a default).
• Its borrowing is capped at either three or five times its net assets, depending on how much is held in residential mortgages and deposits.

When a MIC pays taxable dividends to shareholders, the Act treats them as interest on a bond, and the MIC can deduct dividends it pays, which is why MICs pass most income through to investors ^[1]. None of this directly sets your rate, but it explains why a MIC lends mostly against residential property and why it cares about equity and exits.

How a MIC mortgage differs from a traditional mortgage

Our guides to B-lender mortgages and private mortgage rates go deeper on cost, and our private mortgage exit strategy guide covers how to get out.

Not sure whether a private lender is right? A licensed 8Twelve agent can compare options across 65+ lenders, including alternatives to private lending, OAC. See equity takeout options

What to know about regulation

MIC lending to consumers is regulated like other mortgage lending. In Ontario, FSRA says a mortgage investment entity, a group that FSRA says includes MICs as a subset ^[5], that deals, trades or lends in mortgages with individual consumers must be licensed as a mortgage brokerage under the Mortgage Brokerages, Lenders and Administrators Act ^[3]. Ask who the lender is, who your agent works for, and in writing what each party is charging. Our licences page shows where 8Twelve is licensed.

Questions to ask before you sign a MIC mortgage

1. What is the all-in cost? Rate, lender fee, brokerage fee, legal and appraisal costs, in writing.
2. What is the term, and what happens at maturity? Is renewal possible, and at what cost?
3. Is there a prepayment penalty or minimum interest period?
4. What are the default terms? Late fees, default interest, and when the lender can act.
5. What is my exit plan? See our guide to how second mortgages work if the MIC would hold a second position.

Alternatives to consider first

• A B-lender or alternative lender, which usually costs less than private lending; see our B-lender guide.
• Fixing the file, such as paying down debt, documenting income or waiting a few months.
• A different structure, such as a HELOC or a smaller loan. FCAC says you may usually borrow up to 80% of your home's value, or up to 65% as a HELOC ^[2].

A MIC mortgage is private lending with a specific legal structure behind it. It can solve a short-term problem, but only if you know the full cost, the term, and how you'll exit.

This article is for general information only and isn't financial, legal or tax advice. Rates, products and terms change without notice and are available on approved credit (OAC). The rate and terms you qualify for depend on your individual financial situation, including credit, income, property and loan-to-value. "Best rates" means the most suitable options available for your situation, not a guarantee of the lowest rate. Examples are for illustration only, as of November 14, 2026, and are not an offer. 8Twelve Mortgage arranges mortgages through 65+ lenders and does not lend directly. Licensed across Canada — see our licences.

The MIC tests above summarize section 130.1(6) of the Income Tax Act (current to October 19, 2026) and FSRA's guidance, both checked on November 14, 2026; they describe the lender's structure, not a promise about your rate. Lender practices described as "in our experience" vary by lender. 8Twelve does not fund second or private mortgages; we arrange them with third-party lenders. Private mortgages carry higher costs; lender and brokerage fees will be disclosed in writing before you commit.