National Bank All-In-One
Like other Home Equity Lines of Credit HELOCs), the National Bank All-In-One allows you to borrow against the equity in your home; however, unlike an ordinary HELOC, the All-In-One allows you to combine the line of credit with your other banking accounts.
So, whatever positive balance you have in your savings and chequing accounts temporarily offset your debt. A daily interest calculation ensures any savings are absorbed.
Also with a HELOC, you can re-borrow paid down mortgage principal, up to 80% of the market value of your home. Your credit limit increases as you acquire more equity in your property.
National Bank All-In-One additional features
Where National Bank differs from its main ‘all-in-one’ competitor, Manulife One, is that Manulife One rolls your whole mortgage into the HELOC rate, while National Bank lets you specify which portion of your equity you want to access at its HELOC rate, and which portion will remain in a traditional mortgage with the associated variable or fixed rate.
You can protect against interest rate fluctuations in integrating a fixed-rate mortgage loan, for example, with the National Bank All-In-One. Also, as HELOC rates are typically 1% or more higher than normal variable mortgage rates, this could potentially represent a significant saving compared to Manulife One.
The minimum monthly payment on the All-In-One line of credit portion is merely interest, and regular terms apply for the mortgage loan portion.
National Bank All-In-One advantages
There are a number of advantages to the National Bank All-In-One product in addition to point of differentiation introduced above:
- As you pay off your mortgage, you are able to access funds to go ahead with other projects.
- Transfer higher-charged debts to the lower HELOC rate.
- Unlimited basic transactions are included.
- Segregate your finances in to up to 99 sub-accounts, to track interest and balances separately.
- Choose between a combined approach or a project-by-project approach.
- Absorb any interest savings from deposits offsetting your debt.
- Consolidate your accounts and finances in one monthly statement.
National Bank All-In-One disadvantages
Home Equity Lines of Credit, although a great option, do come with a number of drawbacks as well. First, you may not be able to resist the temptation to spend your available HELOC funds. You should be aware of your ability to exercise discipline in this regard. Second, unlike regular mortgages, HELOCs are often reported to credit bureaus. So, a HELOC could have a potentially adverse affect on your credit score. Finally, HELOCs do not necessarily have a set relationship to the prime lending rate, whereas regular variable rates do. The relationship between a HELOC and the prime rate can technically change at the discretion of your lender.
A regular refinance may also in some cases be less expensive than a HELOC, depending on the level of certainty you have in regards to the amount you need to borrow. If you are sure of the amount to be borrowed and need to access the funds presently, a refinance may make more sense. However, if you would like the flexibility to access the funds as you please, a HELOC may be preferable.