Real Estate

Manulife One Vs. Traditional Bank Mortgage

  • Last Updated:
  • Oct 31st, 2018 11:38 am
[OP]
Newbie
Aug 4, 2018
27 posts

Manulife One Vs. Traditional Bank Mortgage

Good morning all,

Just wanted to know what you all thought of Manulife one. I've been doing quite a bit of research and I think I get the whole concept but aren't sure what the real advantages are. Rates seem to be higher (as they charge prime + 0.5) and you have to pay their monthly fee of around 14-15$.

Little backstory, buying a house with an in-law suite for mother in law, mortgage is being split between her and ourselves. She's been using Manulife for a while now and is adamant the product is best suited for us as it's a great tool to track what we pay back into the house (tracking with the different sub-accounts). She doesn't want to get locked into a fixed period/rate.

I'm concerned that if we wait around, rates will end up hiking (as we've been seeing lately) and that we'll end up having to pay higher interest fees.

My gut is telling me to lock in ASAP, even if it is with Manulife. I guess I'm just not seeing the advantages of the M1 account if we're not planning on using it's "line of credit".

Thoughts?

PS. were closing on Nov. 16th.

Thanks!!
5 replies
Deal Fanatic
User avatar
Feb 2, 2014
7762 posts
2150 upvotes
Toronto
PhilSTJ wrote: Good morning all,

Just wanted to know what you all thought of Manulife one. I've been doing quite a bit of research and I think I get the whole concept but aren't sure what the real advantages are. Rates seem to be higher (as they charge prime + 0.5) and you have to pay their monthly fee of around 14-15$.

Little backstory, buying a house with an in-law suite for mother in law, mortgage is being split between her and ourselves. She's been using Manulife for a while now and is adamant the product is best suited for us as it's a great tool to track what we pay back into the house (tracking with the different sub-accounts). She doesn't want to get locked into a fixed period/rate.

I'm concerned that if we wait around, rates will end up hiking (as we've been seeing lately) and that we'll end up having to pay higher interest fees.

My gut is telling me to lock in ASAP, even if it is with Manulife. I guess I'm just not seeing the advantages of the M1 account if we're not planning on using it's "line of credit".

Thoughts?

PS. were closing on Nov. 16th.

Thanks!!
It's a good "all-in-one" product. But their rates are high and it's a collateral charge (meaning you have to pay additional legal fees if you ever want to switch lenders).
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Penalty Box
User avatar
Aug 19, 2008
1925 posts
499 upvotes
As long as you're not constantly dipping into the available credit as you pay it down, the Manulife One will definitely save you money.

Educate yourself on the basics of compounding interest.
Licenced Realtor and P.Eng
Deal Fanatic
Nov 22, 2015
5521 posts
4810 upvotes
Donnie740 wrote: As long as you're not constantly dipping into the available credit as you pay it down, the Manulife One will definitely save you money.

Educate yourself on the basics of compounding interest.
Huh, how so? How is paying Prime+0.5 on your entire mortgage amount going to help pay it down faster than a traditional fixed/variable rate mortgage?

I don't see any advantage to paying $15 monthly fees just for the 'priviledge' of getting what is essentially a standard HELOC

OP, just go to a broker and lock in a rate. M1 is a great idea but stupid product.
[OP]
Newbie
Aug 4, 2018
27 posts
Donnie740 wrote: As long as you're not constantly dipping into the available credit as you pay it down, the Manulife One will definitely save you money.

Educate yourself on the basics of compounding interest.
I have, all the research I've done points to monthly interest compounding being higher than bi-annually compounding. We're not even planning on using the credit line... so we're basically paying a monthly fee + higher than average mortgage rates for a HELOC which we won't be using.

I get that monthly compounding interest calculations can work in your favor if you have a good money flow coming in, which would in turn lower those interest costs (as they're calculating more often), but this isn't the case here. My girlfriend is still in school so I'm sitting on a single income (for my part of the mortgage) and I cover mortgage costs + bills with a tad of money left over. M1 fees + higher rates + interest will wreck me.
Deal Fanatic
Dec 11, 2008
9958 posts
1470 upvotes
We looked at it when we were getting a mortgage and decided against it. Yes we were going to pay down the house fast but given the difference in interest rates, it did not make sense.

So we opted for a traditional variable mortgage.

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