More high-net-worth families and investors are reallocating capital toward private credit in search of asset-backed income and returns that are not correlated with public markets.
At Union Financial, we offer two distinct ways to access private credit investing: curated direct private lending deals and our Mortgage Investment Corporation (“MIC”). Both pursue income from Canadian real-estate loans, but they differ in structure, risk, liquidity, and how investors can participate.
What is a Mortgage Investment Corporation?
A MIC is a pooled investment vehicle that holds a portfolio of mortgages and distributes the interest it collects to investors.
How MICs work
- Investor capital is pooled and secured by a portfolio of mortgages.
- Investors receive passive income distributions, sourced from interest and fees paid by borrowers.
- A MIC must meet statutory criteria under the Income Tax Act (e.g., Canadian mortgage/real-estate lending focus, shareholder dispersion and ownership limits, and asset-mix rules).
Lending policies, such as target loan-to-value (“LTV”), mortgage position, geography, and borrower profile, are set by the manager and disclosed in the Offering Memorandum (“OM”) for the MIC.
Union Financial’s MIC follows a documented policy with strict governance and oversight by an experienced financial and legal team.
Eligibility and Access
MICs typically raise capital under the OM exemption, allowing a broader set of investors to participate, subject to provincial rules and annual investment limits:
- Non-eligible investors: typically, up to $10,000.
- Eligible investors (meet $75,000 individual income, $125,000 household income, or $400,000 in net assets): typically up to $30,000 per year, or up to $100,000 with a registered dealer’s suitability sign-off.
- Accredited investors: no cap (see thresholds below).
What Is Direct Private Lending?
Direct private lending means funding specific loans, each with its own borrower, collateral (often real estate), term, and rate, rather than investing into a pool.
How Direct Lending Works
- You review and select individual deals with defined terms, security, and expected yield.
- Capital is typically committed for a fixed term (e.g., 12–18 months). Interest is typically paid monthly.
- You rely on a manager/administrator (e.g., Union Financial and our professional partners) for due diligence, servicing, and enforcement.
Investor Access
Many direct mortgage offerings are limited to accredited investors, though some issuers also use the OM exemption (with suitability and limits). Accredited investor thresholds include meeting any one of the following criteria:
- Income: $200,000 (individual) or $300,000 (household) in each of the last two years, with a reasonable expectation of the same in future years; or
- Financial assets: $1,000,000+ (net of related liabilities); or
- Net assets: $5,000,000+.
MIC vs. Direct Lending: Side-by-Side
| Dimension | MIC | Direct Private Lending |
| Structure | Pooled fund secured by a portfolio of mortgages | Investor funds individual loans secured by one or a couple of mortgages |
| Diversification | Broad diversity across loans/mortgage and security/borrowers/regions | Concentrated unless the investor builds multiple positions |
| Control/visibility | Portfolio-level reporting | Deal-level terms, security, and reporting |
| Workload | Passive with professional underwriting/servicing | Active, where an investor selects each deal |
| Minimum investment | Often lower (e.g., $25k) | Typically higher per deal (e.g., ~$250k) |
| Liquidity/term | Rights of redemption: May be delayed or limited | Usually repays at maturity with possible delay or extensions |
| Fees/costs | Fund-level management administration fees | Typically no costs incurred by the investor |
Why Union Financial is different
Union Wealth → investment choices
We can help create a portfolio of public-market holdings (e.g., stocks) and cash flow investments (our MIC), which is very unique for investors.
Union Lending → consistent deal flow
Our lending team maintains a strong origination pipeline to consistently generate mortgage loan investment opportunities.
Union Insurance → integrated planning
For clients using MIC income in estate or life insurance planning (e.g., premium funding strategies), our team coordinates structure and cash-flow considerations.
This coordination of investment products from our business units provide investment opportunities not available from other issuers and advisors.
Who might consider a MIC?
- Young professionals/entrepreneurs who want diversified, passive income from the credit market.
- Families building a base of asset-backed income producing investments.
- Investors who do not yet meet Accredited investor thresholds.
- Investors who prefer a “one and done” approach to private credit investing.
Who might consider direct private lending?
- Accredited investors who prefer the ability to select the deals to invest in.
- Investors comfortable with concentration risk in pursuit of higher rates of return.
- Tax-conscious investors who can invest in the MIC through registered accounts.
It is important to note that many investors do both: they allocate some of their capital to a MIC for baseline diversification and add select direct loans of their choice for higher rates of return.
This material is for information only and not an offer or solicitation. Eligibility, limits, and disclosure requirements differ by province and issuer. Always review the current OM and obtain investment and tax advice. Past performance does not guarantee future results. Liquidity in MICs is policy-based and not assured. Direct loans may not be paid out at maturity or require enforcement.