Frequently Asked Questions

If an individual investor funds 100% of an individual mortgage and holds the mortgage directly, they are solely responsible for sourcing and evaluating the mortgage investment, negotiating the interest rate and all other applicable administrative activities. In this case, the individual investor would also be responsible for ensuring timely payments and dealing with problems that may arise in the event of a default.

A private mortgage is held by an individual, group of individuals, or private corporate entity, such as a Mortgage Investment Corporation (MIC), instead of a bank or other institutional lender. The legal status of any mortgage is the same, regardless of who holds the mortgage. The mortgage borrower is legally obligated to repay their loan at a stated interest rate to the mortgage holder within a stated time period. The mortgage loan is secured by a charge on the underlying real estate owned by the mortgage borrower. Private mortgage interest rates are typically higher than bank mortgage rates.

Mortgages typically offer consistent rates of return, lower risk (as they are backed by the asset – i.e., property) and regular income at a fixed interest rate.

The legal obligations of the borrower, or mortgagor, and the legal remedies available to the lender or mortgagee, are prescribed by law. Private mortgages have long been an investment option used by relatively sophisticated, affluent investors. These investors typically fund 100% of an individual mortgage and hold the mortgage directly.

Investors pool their money by buying shares in a Mortgage Investment Corporation (MIC). A MIC is governed by Section 130.1 of the Federal Income Tax Act to enable investors to invest in a pool of mortgages. A MIC may also borrow from a bank or other lender, employing the shareholders’ capital and loan proceeds to fund its mortgage portfolio. The MIC continuously manages the pool of mortgages with newly invested share capital, with the proceeds of repaid and discharged mortgages being used to fund new mortgages.

The MIC’s management is responsible for all aspects of the company’s operations, including sourcing suitable mortgage investments, analysis of mortgage applications, negotiation of applicable interest rates, terms and conditions, instruction of solicitors, mortgage portfolio and general administration. Like an investment fund, the MIC’s management, in this case, Magenta Capital Corporation, the General Partner, is compensated for carrying out these duties through income distribution.

The Income Tax Act requires that 100% of a MIC’s annual net income, as verified by external audit, be distributed to its shareholders in the form of a dividend. This dividend is taxed as interest income in that it essentially represents a flow-through of the interest earned on the company’s mortgage portfolio. Like any company, a MIC’s net income is equivalent to its revenues, less its expenses. A MIC’s revenues are comprised primarily of mortgage interest and fee income. Expenses are comprised primarily of costs for the administration of the fund, audit and other professional fees, and loan interest if the MIC is employing debt in addition to share capital.

For more information about your return, please contact our Investor Relations Manager, Allison D. Allen at shareholders@magentacapital.ca

Dividends are paid monthly.  Dividends reinvested and held in trust may take up to 10 days after month-end to be reflected in your online account with the trustee.

Incremental dividends are paid annually in the event that Magenta Mortgage Investment Corporation’s growth has exceeded the monthly dividend payments.

Quality residential real estate located in strong, urban real estate markets in Ontario, with a heavy overweighting of 1st mortgages secured by owner occupied single family homes.

Magenta funds real estate properties located in strong, stable urban markets where we have deep experience and understanding of property valuations, like Ottawa, Cambridge and Kitchener-Waterloo.

Our borrowers typically fall just outside of a chartered bank’s loan qualification criteria. For example, they could be professionals starting their careers or new Canadians who have wealth abroad but lack the credit history to secure a loan through the banks.

Canadians and non-residents may subscribe to Magenta shares. Factors such as your net worth, current income, and risk tolerances are considered when determining if investing in Magenta is right for you. Investors may hold their shares individually, jointly, in trust, in a corporation, or in other vehicles such as self-directed RRSP, RRIF or TFSA with the assistance of a trustee.

Please reach out to us today to discuss your potential investment with Magenta.

Magenta Capital Corporation funds real estate properties in a wide range of urban centres across Ontario. In addition to Eastern Ontario and Southwestern Ontario, we have recently expanded into the Greater Toronto Area (GTA). To learn more, contact one of our sales representatives at brokers@magentacapital.ca or click this link to access our Lending Area Map.

1. Submit your file through the Submission Platform of your choice.
2. Once received by Magenta Capital Corporation, you will receive a “Confirmation of Application Received and Underwriter Assigned” email with the next steps and a link to the broker portal.
3. If you don’t have a portal account, you will receive a separate one-time account activation email. Please ensure that it is not in your junk folder.
4. Log in to your broker portal account.
5. View the application status of your file on the “My Loans” page. Loans in progress will appear in the “In Progress” tab.

For more information on the Broker Portal, please refer to our Broker Portal User Guide.