Investors Fortifying Your Portfolio

According to Chris Baker, SVP of Investment Sales at CMI Financial Group, “Private mortgage investments combine the security of real estate collateral with a reliable income stream, making them a more stable alternative to stocks and a more attractive option than low-yield bonds.”

He adds, “In today’s economy, many investors are looking to diversify their portfolios with assets that aren’t directly tied to the ups and downs of traditional markets. At the same time, they want investments that offer competitive returns, steady income and managed risk. Private mortgages provide this ideal balance.”

How Do Private Mortgages Work?

Private mortgages involve lending capital to borrowers who do not qualify for traditional bank financing due to stringent lending requirements or unique financial circumstances. Borrowers may include self-employed individuals, small business owners, or real estate investors seeking financing outside conventional bank structures—or those simply looking for greater speed or flexibility tailored to their unique needs. As more borrowers are excluded from traditional channels, private mortgages are becoming an increasingly vital financing solution.

From an investment perspective, private mortgages offer the opportunity to earn attractive returns through interest payments, backed by the security of real estate-backed collateral; financing is provided either directly by investors or through pooled vehicles such as Mortgage Investment Corporations (MICs).

Building Resilient Portfolios

There are two key options for investors looking to build a more robust, diversified portfolio with mortgage investing: whole mortgage investments and mortgage investment corporation funds (MICs).

Whole Mortgage Investing

Designed for high-net-worth investors seeking more control, whole mortgage investing involves directly funding individual mortgages, usually facilitated by an investment company like CMI. Investors can tailor their risk exposure, loan terms, and overall strategy to align with their financial objectives.

For example, CMI provides a full suite of services including nationwide lending with a strong Western Canada presence, leveraging a network of over 12,000 broker partners to source diverse mortgage opportunities. Through its vertically integrated structure, CMI manages all in-house mortgage administration and oversees each stage, from underwriting, repayment management and administrative tasks, to ongoing performance monitoring, ensuring comprehensive oversight.

Advantages of Whole Mortgage Investing

Direct mortgage investing provides several benefits for high-net-worth individuals.

Control Over Loan Terms

Investors set their own lending criteria, including interest rates, loan-to-value (LTV) ratios, security position and borrower qualifications.

Customization of Risk Exposure

Unlike MICs where risk is shared in a diversified pool, direct lenders can choose specific loans that match their risk tolerance and return expectations.

Potential for Higher Returns

By lending directly to borrowers, setting loan terms and eliminating intermediary management fees, direct mortgage investors may secure higher yields.

Real Estate Collateral

With loans backed by real estate assets, investors have recourse in the event of borrower default. To strengthen this real estate backing, investors can structure loans with conservative LTV ratios and first-position liens.

Whole Mortgages in Investment Portfolios

Direct mortgage lending through a qualified firm offers a hands-off option for investors seeking stable, predictable income without needing specialized expertise. Providers like CMI handle underwriting, borrower vetting, and loan servicing so investors can simply allocate capital to real estate-backed loans that generate fixed monthly returns while diversifying risk across multiple borrowers and properties.

Chris Baker suggests that this option is “particularly suitable for high-net-worth individuals looking to strengthen their portfolios with an investment that offers collateral security and a reliable income stream.”

MICs

The most efficient way to integrate private mortgage investments into a portfolio is through a Mortgage Investment Corporation (MIC), according to Chris Baker. MICs pool investor capital and deploy it across a diversified portfolio of mortgages, reducing individual exposure to borrower default risk while providing professional management and oversight.

Advantages of MIC Investments

Diversification

MICs spread risk across multiple borrowers, property types, and geographic regions.

Professional Management

Experienced fund managers conduct rigorous underwriting, risk assessment, and ongoing portfolio management to optimize returns and mitigate potential losses.

Accessibility and Flexibility

MICs allow investors to participate in the private mortgage market without the high capital requirements or administrative burdens of direct lending, accommodating various risk tolerances and investment goals.

Registered Account Eligibility

Many MIC funds can be held within RRSPs, TFSAs, RRIFs and other registered accounts, offering tax-efficient growth opportunities.

Regular Cash Flow

Investors benefit from stable, predictable distributions, making MICs a strong alternative to traditional fixed-income products.

MICs in Investment Portfolios

Over the next decade, MICs are expected to become an increasingly integral part of diversified portfolios, according to Baker. He notes, “Economic uncertainty, evolving borrower needs, and the demand for alternative fixed-income solutions are driving sustained interest in MICs.”

He also emphasizes, “MICs offer investors regular returns and downside protection while reducing exposure to public market fluctuations. This option allows you to participate in mortgage investing without needing the full capital required to directly fund a mortgage.”

Key Benefits of Private Mortgage Investments

Higher Yield Potential

Private lenders offer greater flexibility in the mortgage application process. Because private lenders serve borrowers who cannot access conventional financing, filling a much-needed gap, they can charge higher interest rates. This translates into higher return potential for investors willing to assume the associated risk.

Income Generation

They provide regular cash flow through monthly or quarterly interest payments, making them attractive for income-focused investors such as retirees. Unlike dividend stocks or bonds, which are subject to market fluctuations and sensitive to interest rate changes, mortgage repayment rates tend to be strong and stable. Also, the short-term nature of private mortgages (averaging around 12 months) makes them less vulnerable to interest rate fluctuations.

Portfolio Diversification and Low Market Correlation

Their performance is largely independent of public equity and fixed-income markets, helping to stabilize portfolios during periods of market turbulence and reducing reliance on market-traded assets. MICs complement traditional investments, reducing reliance on market‐traded assets, especially during downturns.

Real Estate-Backed Security

Being secured by tangible property offers an added layer of security and enhances capital preservation. Choosing a reputable mortgage investment company like CMI, with a strategic approach to mortgage selection, portfolio management and geographic diversification, further mitigates risk.

Inflation Protection

With rising inflation concerns, real estate and private mortgages serve as effective hedges, as property values tend to rise in tandem with inflation. The ability to adjust lending rates in response to inflation further bolsters their defensive appeal.

Weathering Economic Uncertainty and Volatility

As market dynamics shift, it is imperative to build portfolios that can weather volatility while maintaining steady returns. Private mortgage investments have rapidly emerged as one of the fastest-growing alternative asset classes and are increasingly becoming a core component of resilient portfolios.

In today’s volatile and uncertain economy, investors seek assets that not only offer regular income but also provide robust risk mitigation. Private mortgages combine the defensive characteristics of real estate and predictable cash flow, with diversification and little to no correlation with public securities markets, making them a compelling option for weathering market volatility and economic changes.

Moreover, the growing need for alternative fixed-income solutions and stable, income-generating assets further underscores why private mortgage investments are indispensable in modern wealth management strategies. Partnering with a leader in private mortgage solutions enables investors to enhance yield, diversify risk, and fortify their wealth against future economic uncertainties.

Choosing a Leader in Private Mortgage Solutions

For investors seeking a trusted partner in the private mortgage investment space, CMI Financial Group (CMI) stands out as a premier provider of both MIC funds and curated whole mortgage portfolios. With over 20 years of experience and more than $1 billion in mortgage assets under management, CMI has built a strong reputation for delivering consistent returns and investor-focused strategies.

CMI offers a range of MIC investment options tailored to different risk profiles and investor objectives, while its mortgage-matching process ensures whole mortgage investors benefit from a customized, full-service investment experience.

Unlike many regionally focused MICs, CMI lends across Canada in urban and suburban centers, as well as on rural properties on a case-by-case basis, offering geographically diversified mortgage portfolios. Their strategic investment approach incorporates thorough due diligence, active risk management, and ongoing monitoring, backed by an institutional-calibre technology platform, to ensure optimal fund performance across economic cycles. Additionally, CMI’s comprehensive in-house mortgage administration enhances operational efficiency and quality control, leading to reduced expenses and improved investor returns.

CMI investors also benefit from the opportunity to reinvest distributions through a Dividend Reinvestment Plan (DRIP), which compounds earnings over time and enhances long-term wealth accumulation.