Mortgage Amount If you are a first-time homebuyer, the mortgage amount is the price of the home you intend to purchase, minus your down payment. If you are renewing or refinancing your mortgage, this is the value of your the mortgage.
       Term The mortgage term is the amount of time a home buyer commits to the rules, conditions and interest rate agreed upon with the lender. The term can be anywhere from six months to 10 years, with a 5-year mortgage term being the most common duration.
       Amortization The amortization period is the length of time it takes to pay off your mortgage in its entirety. The most common amortization period is 25 years, with the maximum set at 30 years for down payments less than 20%. Although longer amortization periods reduce your monthly payments, you will pay more interest over the life of your mortgage.
Provider
HELOC
HELOC
3 years
Fixed
5 years
Fixed
10 years
Fixed
Manulife One
Manulife One 		3.50%
Prime + 0.50 		3.30% 3.40% N/A
National Bank
National Bank 		4.00%
Prime + 1.00 		3.95% 3.99% 6.75%

All-in-One Mortgages

An All-in-One product combines savings and deposits with a Home Equity Line of Credit (HELOC). The single account combines your transactions at a daily interest calculation, with deposits temporarily offsetting your debt. There are currently two All-in-One products in Canada: the Manulife One Bank Account and the National Bank All-in-One. These financial products are gaining interest in Canada due to the marketing campaigns behind them.

There are a couple ways that the All-in-One products differ from typical HELOCs.

  • Instead of interest being calculated on the total borrowed amount (as with a general HELOC), it is calculated on the amount borrowed minus any positive deposits.

Other points to consider:

  • You can consolidate your debt at one interest rate. This works well if you integrate higher-charged debt such as loans and credit cards.
  • HELOCs can be tempting, so ensure that you can exercise discipline and not use your entire line of credit on discretionary spending.
  • There is no set interest rate or terms with a HELOC. Regular variable mortgage rates usually have a set relationship to the prime rate. The relationship between a HELOC and the prime rate can technically change if your lender wishes to do so.

Calculate the HELOC section of an All-in-One

A Home Equity Line of Credit allows you to borrow up to 80% of the equity built up in your property, less the outstanding balance on your mortgage. As you pay down your mortgage, more HELOC funds are automatically available to you. And you only have to pay interest on the portion of the HELOC that you are using.

To further clarify HELOCs, let`s consider the following example:

  1. You purchased a property for $400,000
  2. You took out a mortgage of $380,000 at a 5-year fixed mortgage rate of 4%
  3. After 5 years, the market price of your house has increased to $500,000
  4. The current outstanding balance on your mortgage is $300,000
  5. 80% of $500,000 = $400,000
  6. Your available line of credit is $400,000 – $300,000 = $100,000

You will continue to make fixed mortgage payments at 4% interest. However, you will have access to $100,000 of extra funds at 5%. With an All-in-One mortgage, you have access to the specific HELOC rates that each lender provides.

Remember that the ‘All-in-One’ HELOC rate is a variable interest rate, so it fluctuates with the prime lending rate. Regardless, the minimum HELOC payment you will have to pay is only interest (as opposed to principal and interest with a mortgage payment). There are benefits to the All-in-One products but so your research and ensure that it will meet your financial needs.

Both the Manulife One and National Bank All-in-One are similar products, but each account has a few unique features as well. You can visit their product pages for more information.

Current All-in-One Mortgage Rates