Comparing Mortgage Investment Structures in Canada: MIC, Fund, LP, Trust and Syndicated

An investor comparing mortgage investment structures in Canada meets a confusing set of labels: MIC, mortgage fund, mortgage trust, limited partnership, syndicated mortgage. Underneath, most of them hold the same kind of asset — loans secured by real property. What differs is the wrapper, and the wrapper decides how the income is taxed, who chooses the loans, how the risk is spread and how, or whether, the investor can get money out.

This comparison sets the main structures side by side and states the trade-offs in both directions. It does not rank them. This is general education, not investment, tax or legal advice. Mortgage investments are not guaranteed. Returns are targets, not promises, and principal can be lost.

What are the main mortgage investment structures in Canada?

There are five common structures, and each one answers the question “what exactly do I own?” differently. Terms used below are defined in the mortgage investment glossary.

• Mortgage investment corporation (MIC) — a Canadian corporation that meets the conditions in section 130.1 of the Income Tax Act and passes its income through to shareholders. The basics are in what a mortgage investment corporation is.
• Mortgage trust — a pooled fund organised as a trust, governed by a declaration of trust, in which investors hold units.
• Mortgage limited partnership (LP) — a partnership in which a general partner runs the business and investors hold limited partnership units.
• Syndicated or fractional mortgage — a share of one identified loan held with other investors, explained in fractional and syndicated mortgage investing.
• Whole mortgage held directly — one investor funds an entire loan; see direct mortgage investing.

“Mortgage fund” is used loosely across the industry and can describe any of the pooled structures, as well as publicly offered mutual funds that hold mortgages and are sold by prospectus.

How each structure works and how its income is taxed

The wrapper determines the tax character of what reaches the investor. Tax information on this page is as at October 2026; a Canadian tax professional can confirm how it applies to a particular investor.

Mortgage investment corporation

A corporation is a MIC throughout a taxation year only if it meets nine conditions in subsection 130.1(6) of the Income Tax Act throughout that year. Among them: it is a Canadian corporation whose only undertaking is investing its funds; it has 20 or more shareholders and no one, together with related persons, holds more than 25% of the issued shares of any class; at least 50% of the cost amount of its property is residential mortgages, insured or credit-union deposits and cash; real property held directly is no more than 25% of the cost amount of all property (excluding property acquired by foreclosure or after default); and its liabilities are capped at 3 times equity, or 5 times where residential mortgages, deposits and cash make up at least two-thirds of its assets.

Under subsection 130.1(2), a taxable dividend from a MIC (other than a capital gains dividend) is deemed to be received as interest. In practice it is taxed as interest income at the investor’s marginal rate, with no dividend gross-up or tax credit, and reported on a T5. MIC shares are generally a qualified investment for registered plans, but they can become a prohibited investment under the rules in section 207.01 of the Income Tax Act if the plan holder, with non-arm’s-length persons, holds 10% or more of any class. MIC shares are not deposits and carry no CDIC deposit insurance.

Lendmax Capital MIC, for example, is structured under section 130.1 and distributes its shares to qualified investors through a registered exempt market dealer, with know-your-client and suitability review before any subscription.

Mortgage trust

In broad terms, a trust that pays or makes its income payable to unitholders can deduct that income, so the income is taxed in the unitholders’ hands, usually reported on a T3 slip. How the income is characterised, and whether the units are qualified investments for registered plans, depend on the trust’s own status. The offering memorandum’s tax section states the position; it is worth confirming with a tax professional.

Limited partnership

A partnership is generally not taxed itself. Its income is allocated to the partners, who report it from a T5013 slip and are generally taxed on their allocated share for the year whether or not it is paid out in cash. Limited partners’ liability is generally limited to their investment, in exchange for leaving management to the general partner. Registered-plan eligibility for LP units is narrower than for MIC shares; confirm it with the plan trustee before assuming otherwise.

Syndicated or direct mortgage

The investor holds an interest in the loan itself, so the income is interest, taxed at the investor’s marginal rate. A direct or syndicated mortgage can sometimes be held in a self-directed registered plan where the loan is at arm’s length and the plan trustee accepts it.

Mortgage investment structures compared side by side

The table summarises typical features. Basis of comparison: an individual Canadian investor buying a private (unlisted) offering, as at October 2026. Each offering’s own documents govern, and individual offerings can differ from the typical pattern.

What is the difference between a MIC and a syndicated mortgage?

The key difference is what you own. A MIC investor owns shares in a corporation holding a manager-selected pool of mortgages; a syndicated mortgage investor owns a share of one loan they chose. Everything else follows from that.

Both are securities when sold to investors. MIC shares are usually distributed under prospectus exemptions in National Instrument 45-106, such as the offering memorandum or accredited investor exemption. For syndicated mortgages, the 2021 amendments to the same instrument removed the private issuer and “mortgages” exemptions and added appraisal requirements for offering memorandum distributions, in force 1 March 2021 (1 July 2021 in Ontario and Québec). This is current as of October 2026.

Mortgage fund vs MIC: what the label hides

A MIC is a tax status; “mortgage fund” is a description. Any pooled mortgage vehicle may call itself a fund, so the useful question is which legal structure sits underneath and what rules it must follow. The comparison is developed further in mortgage funds in Canada and how they differ from a MIC.

The trade-off runs both ways. A MIC must meet the nine conditions — including the residential-mortgage asset test, the leverage caps and the shareholder-spread rules — which constrain what it can do. A fund that is not a MIC is free of those particular constraints. It may lend more widely, use different leverage or concentrate more, which can raise or lower risk depending on how that freedom is used. Its tax treatment follows its own structure instead of section 130.1.

Senior fund vs junior fund

Some managers run more than one pool and call them a senior fund and a junior fund. Neither label has a legal definition. In general use, a senior fund concentrates on first mortgages at moderate loan-to-value, while a junior fund holds mainly second or later mortgages, loans at higher combined loan-to-value, or a subordinated class that absorbs losses before a senior class. The junior pool usually targets a higher yield because it stands closer to the front of the line for losses.

Investors comparing the two might check:

• The position mix and loan-to-value — the share of first, second and subordinated positions and, where disclosed, the weighted-average loan-to-value, in the offering memorandum and audited financial statements.
• What “junior” refers to — the loans’ rank on title, or the investor’s rank inside the fund, such as a subordinated class or units ranking behind a credit facility.
• Overlap between the pools — whether the funds lend on the same properties, which links their outcomes and raises conflicts of interest to look for in the offering memorandum.

A higher target yield on a junior fund reflects higher risk; neither fund’s returns are guaranteed, and principal can be lost.

Mortgage limited partnership in Canada: how it differs

A mortgage LP concentrates control in the general partner and offers limited partners limited liability in return. That suits investors who want a defined, often project-specific mandate, and it brings three trade-offs worth weighing.

• Control. Limited partners generally take no part in management; they rely on the general partner’s decisions and reporting.
• Tax timing. Partners are generally taxed on allocated income for the year even if the partnership keeps the cash.
• Exit. Transfer and redemption rights are often limited, and registered-plan eligibility is narrower.

How liquidity differs across structures

Liquidity is where the structures diverge most in practice. Pooled vehicles redeem under their own documents, usually with notice periods and with the board’s or manager’s right to defer, limit (gate) or suspend redemptions. Private pooled vehicles generally have no secondary market. A syndicated or direct mortgage generally returns capital only when the borrower repays, and a default can extend that by months.

These terms matter more than the structure label, so investors read the redemption section of the offering memorandum closely. The mechanics are covered in liquidity and redemption.

What each structure does well, and what it costs

Each structure’s main strength is matched by a cost. Higher return potential in any structure comes with higher risk.

• MIC — spreads risk across many loans, weighted toward residential mortgages by the 50% asset test, with statutory leverage caps; costs include management fees, reliance on one manager and redemption limits.
• Mortgage trust — pooled diversification with flexibility the MIC rules do not allow; tax and registered-plan treatment depend on the trust’s status.
• Limited partnership — a defined mandate and limited liability; narrower liquidity, less investor control and tax on income allocated but not distributed.
• Syndicated mortgage — choice of the loan and a direct interest in it; concentration in one borrower and property, and shared decisions.
• Whole mortgage — full control; full concentration and personal responsibility for enforcement.

Documents to check for each structure

The disclosure documents differ by structure, and each answers specific questions.

• Any pooled structure — the offering memorandum (risk factors, fees, conflicts, redemption terms) and audited financial statements.
• MIC — the OM’s confirmation of section 130.1 status, the share classes and the leverage policy.
• Mortgage trust — the declaration of trust and the OM’s statement on tax status and registered-plan eligibility.
• Limited partnership — the partnership agreement and the general partner’s financial position.
• Syndicated mortgage — the appraisal, the co-lending or trust agreement and the title search.
• The seller — registration status on the CSA National Registration Search.

How each structure’s income lands on a tax return is covered in how mortgage investment income is taxed in Canada.

What this means for a mortgage investor

Mortgage investment structures in Canada wrap similar loans in different legal forms, and the form decides ownership, tax, control, diversification and liquidity. A MIC and a syndicated mortgage differ above all in what the investor owns: shares in a pool, or a share of one loan. Investment structure is one of the seven axes on which mortgage investments vary, alongside the borrower, the property, the loan-to-value, the security position, the term and the jurisdiction, and a sound comparison reads every offering along all seven.