Frequently Asked Questions
Q. Who is IQInvest MIC?click here to expand
A. IQInvest Mortgage Investment Corporation, based in Toronto, Ontario, is a non-bank lender providing flexible and creative financing solutions to the real estate communities in Canada.
IQInvest Mortgage Investment Corporation is a mortgage investment corporation as defined under the Income Tax Act, which is managed and administered by CWF Group Mortgages Inc. (FSRA Administrator License No. 12944 and Brokerage License No. 12786). IQInvest offers investors an opportunity to participate in a diversified portfolio of high yield Canadian residential mortgages primarily focused on owner-occupied residential real estate in Ontario in both urban and suburban markets.
We are experienced professionals, with over 50 years of experience in financial investing, real estate, financial lending, legal, and business development who have come together to provide investors and borrowers an attractive investment and borrowing solution.
Q. What is the size of the MIC market?click here to expand
A. The Canadian residential mortgage market surpassed 1.6 trillion dollars in 2016. It has been growing at an annual growth rate of 7% compounded every year for the last 10 years. The Banks and Trust Companies focus on 80% of the market. Due to tighter restrictions due to the recent OSFI B-20 Guideline, the Banks and Trust Companies have restricted their lending practices. This has created a larger opportunity for MICs.
Q. How is the MIC market regulated?click here to expand
A. In the province of Ontario, the Financial Services Regulatory Authority of Ontario (FSRA) licenses and regulates all mortgage brokers, agents, and administrators. MICs are subject to the Income Tax Act and OSC oversight.
Q. What risks are associated with investing in a MIC?click here to expand
A. All property investments are subject to elements of risk. Property value is affected by general economic conditions, local real estate markets, the attractiveness of the property to tenants, competition from other available properties, and other factors. While independent appraisals are required before MICs may make any mortgage investment, the appraised values provided therein, even where reported on an “as in” basis, are not necessarily always reflective of the market value of the underlying property, which may fluctuate.
The MIC’s income and funds available for distribution to security holders would be adversely affected if a significant number of borrowers were unable to pay their obligations. Upon default by a borrower, MICs may experience delays in enforcing its’ rights as a lender and could incur costs in protecting its investment.
Additional risk considerations include:
- Lender inexperience through credit cycles
- Lender does not have any workout experience
- The province in which the MIC invests is an important consideration with respect to the real estate market and the ability to enforce lender rights
- Size of the mortgage
- Term of the mortgage
- Loan-to-value ratio
- Proportion of the MICs assets in first vs. second vs. third mortgages
- Proportion on the MICs assets in residential vs. commercial vs. land
For further information on risks associated with investing in a MIC please refer to the Offering Memorandum.
Q. Who borrows from IQI MIC?click here to expand
A. While banks are readily available sources of loans, recent legislation has required banks to adjust and restrict their mortgage lending policies. Borrowers who previously qualified for bank loans may now be rejected. This is where IQI MIC can step in and fill the gap. IQI is more efficient than a conventional bank, credit union, or trust company and can provide financing on a timelier basis. Additionally, IQI has greater flexibility in managing its relationships with borrowers and can tailor solutions to each borrower’s situation. Investors, through the MIC, can assist these individuals, while earning a healthy and stable return.
Q. What kind of mortgages does IQI invest in?click here to expand
A. Our mortgages are secured by Canadian real estate located in Canada, primarily in Ontario. We lend based on the value of property and credit-worthiness of our borrowers.
Q. Why does IQI focus on financing mortgages in Ontario?click here to expand
A. IQI is pro-active in working with borrowers and has a structured process in place in the event
legal action is required. In situations where the borrower is unable to service the loan, IQI will send a demand letter if the mortgage is more than 16 days arrears. The power of sale can commence in Ontario after 37 days compared with much longer periods (6+ months) in other provinces.
Q. How does IQI MIC originate mortgages?click here to expand
A. IQI originates deals through licensed mortgage brokers and licensed agents in Ontario. The Manager is retained to manage the mortgage portfolio. IQI MIC does not broker mortgages for a fee or pay origination fees.
Q. Is financing real estate as secure as owning it?click here to expand
A. While the real estate values may change, investors do not have the same concerns as owners about possible value losses. If the financing opportunities are well selected, the return is fixed over the life of the financing.
Q. Is leverage utilized?click here to expand
A. IQI MIC has the option to incur indebtedness secured by the Corporation’s assets to purchase or make mortgage investments. Historically, IQI has used leverage as a cash management tool to even out investor inflows with outflows. See the Offering memorandum for further detail.
Q. How am I taxed?click here to expand
A. Your returns are taxed as interest, not dividends.
Q. Is MIC investments registered investment eligible?click here to expand
Q. Can I invest through my RRSP or TFSA as well as cash?click here to expand
A. Yes, IQInvest MIC is an investment for all Canadian registered plans, examples being the RRSP and Spousal RRSP, RRIF, TFSA, RESP, RDSP, LIF, LRIF, LIRA, and IPP. Many IQI investors invest both cash and registered funds.
Q. Can I transfer my registered plan to IQI?click here to expand
A. Yes, you can. We handle the transfer for you.
Q. How long is my money committed?click here to expand
A. Your funds are committed for 1 year when investing in our Class A Shares and 3-years when investing in our Class B Shares. You choose. Our Class B Shares offers an Early Redemption clause to redeem the investment earlier than its due date (subject to an early redemption penalty).
Q. What are the start-up fees associated with opening an account?click here to expand
A. At IQInvest there are no start-up fees associated with opening a cash account. Registered accounts cost $150 per year ($42.38 payable quarterly) and a $50 one-time share purchase fee.
Q. How is my investment secured?click here to expand
A. IQI Investors are value investors. They are long-term thinkers who have faith in the enduring value of Canadian real estate property. They are not interested in the quick buck, volatility, and its associated risks. They like regular income and growth through compound interest. IQI’s investment is secured by valuable Canadian real estate and personal guarantees of mortgage borrowers.
Q. What is the typical investment amount?click here to expand
A. There is no ‘typical’ investment amount. You may invest as little as $25,000 and you may make monthly contributions to your investment account.
Q. How are dividends received?click here to expand
A. Investors can choose to take advantage of the automatic dividend reinvestment plan (DRIP) and gain the benefit of compounding their return. Alternatively, investors can receive their quarterly dividends by cash.
Q. How do I benefit from compound interest?click here to expand
A. By reinvesting dividends compound interest increases your investment exponentially without any work. Unlike most banks that compound your interest once a year, IQI compounds your interest four times a year.
Q. How do I subscribe?click here to expand
A. An investor wishing to subscribe for Offered Shares must ensure that a duly completed and executed subscription agreement (a “Subscription Agreement”) in the form provided by, or on behalf of, the Corporation is received by the Corporation (or its agent) by 4:00 p.m. (EST) within two (2) business days before the applicable Subscription Date for the subscription to be processed as of such Subscription Date.
- Please speak to your financial advisor regarding your interest in investing in the IQI MIC.
- Your advisor will have you fill out our Subscription Document and help you determine suitability.
- Upon completion of the Subscription Document, your advisor will post the trade.
- Dealers/Advisors are required for all initial purchases to deliver a copy of the completed Subscription Agreement to IQI MIC via Email to email@example.com.
- Please contact our office for a detailed subscription process.
Q. How do I retract my shares?click here to expand
A. Subscriber wishing to retract all or any portion of his, her or its Shares on a Retraction Date must submit written notice of such intention to the Corporation a minimum of six (6) months before the Retraction Date (which period may be varied or waived by the directors of the Corporation in their sole discretion).
Q. Is there a lock-up period?click here to expand
A. Yes, 12 months..
Please note that this FAQ has been completed accurately to the best of our abilities and knowledge as of June 2020. As market conditions evolve, the answers can change over time. This is not a legal document. Please refer to the Offering memorandum for the full legal term.