Manulife is one of the largest financial institutions in Canada and is the largest life insurance company. Its history of success is driven by a commitment to product excellence and competitive pricing, and when it comes to its mortgage division, there is no exception.
Manulife offers a suite of standard fixed rate and variable rate mortgage types and some of the best mortgage rates in the market. However, what makes them really stand out is their Manulife One product.
Many have asked how the Manulife One works and how it can save money on mortgage interest costs. Here is a breakdown of how it works and how you can benefit from it:
Manulife one main mortgage
The main mortgage component can be thought of like most mortgages. It is a variable rate or fixed rate that is amortized over a set number of years, for example, 25 years.
Manulife one credit line component
The credit line component of the manulife one mortgage is separate from the main amortizing mortgage component, as most HELOCs are. With Manulife however, the strategy is to add some balance to the HELOC component. For example, if the main mortgage component is $300,000, there may be $100,000 of balance allocated to the HELOC.
Whereas for most HELOCs its not typical to begin with a balance on the HELOC, with Manulife its encouraged to help save on interest. But how?
The Manulife One Bank account
The bank account is the third and final component of the manulife one mortgage. The key is that when you’re paid into your Manulife bank account, the full amount of your income is applied directly against the balance owing on the HELOC.
Therefore, your balance owing is lower from day one of your most recent paycheque.
Then, when you spend from the account, the HELOC balance grows over the 2 weeks or month until your next pay cheque. But because the pay keeps applying to your balance in full on each pay period, this has a dramatic effect over time in reducing how much interest is paid.
As important is a budgeting feature built into the mortgage. If you spend less than each pay cheque, the mortgage is paid down faster. No extra ‘pre payments’ are required because as long as you spend less than you earn, the mortgage is automatically paid down faster. For example, if every 2 weeks, there’s $500 of excess/ unspent, this stays against the HELOC and lowers interest payments.
Over time, this is a very efficient, convenient and powerful strategy.
While the best Manulife mortgage rates are important, how the mortgage is structured is equally important, with the ultimate goal of lowering total interest cost.
Connect with an Altrua Mortgage Broker for more details and to see how a Manulife mortgage strategy can apply to your situation more precisely.