What Are the Risks for Mortgage Investment Corporations?
Learn how to protect your money while earning steady returns.

Mortgage Investment Corporations (MICs) are becoming a popular way for Canadians to grow their savings. They offer monthly income, RRSP and TFSA eligibility, and better returns than most bank savings accounts. But before you invest, it’s important to understand the risks for mortgage investment corporations.

Like any investment, a MIC is not 100% safe. But the good news is—you can learn how to read the signs and choose the right one. Let’s look at what makes a MIC more or less risky, and how smart investors protect themselves.

1. Loan-to-Value (LTV): How Much Is Borrowed vs. What It’s Worth

Loan-to-value, or LTV, is one of the most important numbers in a MIC.

It shows how much money the borrower is taking out compared to the value of the home or property.

• A low LTV (like 60%) means the borrower only borrowed half of the property’s value. That’s safer for the investor.

• A high LTV (like 80% or more) means the loan covers most of the value. That’s more risky.
  

If the borrower doesn’t pay and the MIC has to sell the home, a low LTV gives more protection—you can still get your money back. That’s why good MICs keep LTVs low whenever possible. At Blue Pearl MIC, we focus on low LTVs to protect your money.

2. What Kind of Property? Residential vs. Commercial

Another key risk for mortgage investment corporations is the type of property the loan is on.

• Residential properties are homes where people live. These include houses, condos, and townhomes.

• Commercial properties are buildings for businesses—like shops, offices, or warehouses.
  

Residential mortgages are usually safer because people need a place to live, even during hard times. Commercial buildings can be riskier. If a store or office shuts down, it may take months or even years to find a new tenant.

At Blue Pearl, we focus mostly on residential mortgages because they’re easier to understand, easier to sell, and tend to be more stable over time.

3. Built Homes vs. Land and Construction Projects

Another key risk for mortgage investment corporations is the type of property tied to the loan. Ask yourself: Is the MIC lending on a home that’s already built—or a project that still needs to be finished?

• A built home already has value. It can be appraised, rented, or sold quickly if needed.

• A construction or development loan depends on future success. If the project is delayed, canceled, or goes over budget, investors could face serious losses.
  

We’ve seen real examples of this in 2023 and 2024, where several developers in Canada—especially in Ontario and B.C.—ran into financial trouble or collapsed entirely due to rising interest rates, higher construction costs, and delays in city approvals. Some well-known pre-sale condo projects were cancelled or halted mid-construction, leaving investors and lenders at risk.

These situations show how speculative development loans carry much higher risk, especially in uncertain markets. That’s why Blue Pearl MIC avoids these types of loans. We mostly lend on completed residential properties that already have value and strong market demand.

4. First, Second, or Third Mortgage: Who Gets Paid First?

Not all mortgage loans are created equal. In a foreclosure (when a borrower can’t pay), lenders get paid in order:

• A first mortgage gets paid first. This is the safest position, but usually offers lower returns.

• A second mortgage gets paid next. It’s a bit riskier—but it comes with higher returns.

• A third mortgage is last in line and carries the most risk.
  

At Blue Pearl, we often invest in second mortgages with low LTVs. Why? Because second mortgages offer a sweet spot—they pay more than first mortgages, but can still be low risk when the total loan is small compared to the home’s value.

So if you're looking for higher returns with smart safety controls, second mortgages are often the best middle ground.

5. Where Are the Properties? Big Cities Offer More Stability

The location of the loans matters—a lot. Many MICs focus on cities or regions they know well. At Blue Pearl, we focus on major urban areas like:

• The Greater Vancouver Area (GVRD) in British Columbia

• The Greater Toronto Area (GTA) in Ontario

Why these places? Because they have lots of people, jobs, and immigration. That means there’s steady demand for housing, even if interest rates go up or the economy slows down. With more people moving in and more industries hiring, home prices tend to be more stable.

In simple terms: cities with growth attract buyers and renters—and that helps protect your investment.

Final Thoughts: How to Manage the Risks for Mortgage Investment Corporations

When looking at any MIC, here are the smart questions to ask:

• What is the average loan-to-value?

• Are they lending on homes or businesses?

• Are the loans for existing properties or new builds?

• How many are in first or second position?

• Where are the properties located? Is there strong local demand?
  

At Blue Pearl Financial, our MIC has delivered double-digit average returns since 2017. We manage risk by focusing on low LTVs, residential properties, second mortgage sweet spots, and growing urban markets.

Want to see how it fits into your portfolio?
Let’s talk! We’ll walk you through our process and help you decide if this investment is right for you.

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Disclosure Statement:

This document does not constitute an offer or solicitation by anyone in any jurisdiction in which an offer or solicitation cannot be legally made, or to any person to whom it is unlawful to make a solicitation. This document is for informational purposes only and does not provide advice, recommendations, or determinations of suitability in respect of proposed purchases or sales of any securities. Past performance is not indicative of future results, and there are no guarantees of any specific outcomes. Investing in securities involves risks, including the potential loss of principal. Prospective investors should carefully consider their investment objectives and consult with their own financial, legal, and tax advisors before making any investment decisions. This investment opportunity may be suitable only for accredited or qualified investors as defined by applicable securities laws.