Have you ever given any thought to how hard the money
in your bank account is working for you? If you have, you have probably
come to the realization that, with the low savings rates, it really isnt
doing very much at all. And for those with mortgages and other types of
consumer debt that carry high rates of interest, one cant help but
wonder if there isnt a better way.
Now there is.
Manulife One, offered by Manulife Bank, is a financing option with a high level of flexibility geared to make your money work harder for you by reducing your total debt and the amount of interest paid on money that you borrow.
It works to save you money by combining your savings accounts and debt accounts into one big account, which is linked to the value of your home. In essence, this program allows you to borrow up to 75 per cent of the current market value of your principal residence, using your home as security. This money is then used to pay off your existing mortgage as well as any other outstanding debt you may have.
And instead of having your chequing and savings accounts and short term investments earning little interest at a traditional financial institution, it allows that money to work for you by applying those balances against the amount that your borrow. This works to instantly reduce your debt and saves much more in interest costs compared to the interest you would be earning on your savings.
As an added benefit, your debt can be further reduced by adding your regular income (such as paycheques) to the account. As this income is deposited into the account, the outstanding debt is automatically reduced as soon as the deposit is made. And as the interest is calculated on a daily basis (but not compounded daily), your money is working for you until you need to withdraw it to pay for your monthly expenses. This allows you to keep your debt at low level while lowering the interest that you pay on your debts.
The account also provides the convenience and flexibility of having only one monthly statement detailing your financial standing, eliminating the time spent keeping track of monthly statements from various sources. The money in your account can also be accessed at any time through the use of your debit card, ATM, cheque writing, telephone and Internet banking as well as with the Manulife Bank MasterCard credit card. It bears to keep in mind however, the danger that this could present by having funds available at all times to satisfy any whim. A large degree of self-control may be a built in requirement with this plan.
Another featured benefit of this program is the ability to set up "sub-accounts" within your account. This allows you to track certain borrowings (loans for investment purposes, for example) and to track the interest on those borrowings separately, which can come in handy for tax purposes.
The Manulife One program also offers you the option of setting up one fixed rate sub-account that would allow you to lock in a portion of your borrowings - or up to 75 per cent of the current balance - at a fixed rate. Therefore, should you be concerned that variable interest rates are on the rise, you could shelter some of your debt while avoiding the need to cancel your entire account.
Manulife One is designed to continue to be a benefit to you even after your loan has been paid off. When you have obtained debt-free status, you can continue using your account and you will be given a highly competitive money market interest rate on any positive balance carried in your account.
As an added incentive, Manulife Bank will also cover the appraisal costs incurred to determine the current market value of your principal residence. And provided that you use their Title Insurance program, they will cover the legal fees on a straight forward title search. It is worth noting however that they will not cover any penalties charged by your current financial institution for cancelling your mortgage early. Also, all of the above services are provided for one monthly administration fee that covers unlimited banking transactions throughout the month.
Even those with no debt can find that they can benefit from this financing option. While it was developed with an eye to helping Canadians break free from their debt, it can be useful to those who anticipate the need to borrow money in the future. By acting as a line of credit, it allows you to avoid the hassles of negotiating a loan each time you need to borrow and works with you to pay back the money you borrow quickly and easily. Also, when the loan is paid off, any positive balance is treated the same as the regular account, earning a competitive rate of interest.
By addressing the common struggle of finding a way to make your money work for you, it combines the key elements of your financial picture into a single multi-purpose account.
However, like most things, some degree of caution is advisable. If you're the type of person who borrows up to any pre-authorized credit limit, then this product may not be the best for you as you may never pay off the outstanding principal.
Some things to seriously consider and keep in mind are having:-
For more information on this
program, please contact Fiscal Agents at (905) 844-7700.
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