Canada’s limited number of financial institutions and their tightening in policy regarding their mortgage lending has created an opportunity to service a segment of the mortgage market with an increasing level of security for our shareholders. We focus on generating a strong yield for our shareholders by providing mortgages to qualified borrowers that cannot be placed with financial institutions but represent an acceptable level of underwriting risk. Our strategy employs a disciplined approach that prioritizes a borrower’s capacity to repay and focuses only on those real estate sectors with acceptable risk profiles.
Investing in real estate offers security, but owning it can be risky when markets soften. MIC and mortgage investing offers downside protection relative to an equity investment when real estate prices decline. We lend on average 57% of the value of a home, so our portfolio can absorb a drop in the housing market with minimal expectation of loss.
We provide mortgages to borrowers whose financing needs are not being met by larger financial institutions. The average size of mortgage in our portfolio as of June 30th, 2017 is $205,371 with a weighted average interest rate of 8.48% and a portfolio average loan-to-value of 57%. The loan-to-value ratio of any mortgage at the time of underwriting may not exceed 75% of the current appraised value.
We consider our mortgage portfolio high quality yet we are able to charge higher rates than the banks because we offer flexibility, short term solutions and we serve a segment of the market that is currently underserved.
A typical loan in our portfolio has an interest rate of 6.5% to 8.5% per annum, a loan-to-value ratio of 55% – 65%, a one or two-year term and monthly amortized mortgage payments.
(At June 30th, 2017)