As I’ve been looking into using the Smith Manoeuvre strategy, I’ve come across a few mortgage solutions that will fit nicely. Among them include the RBC Homeline mortgage, the First Line Matrix mortgage, and the Manulife ONE (M1) mortgage. The first two mortgages are similar where they have a traditional mortgage portion with a home equity line of credit (HELOC) portion attached to it which increases the credit limit as the mortgage gets paid down. The M1 mortgage, on the other hand, works a bit differently.

How does the M1 mortgage work?

  • The M1 mortgage operates like a giant secured line of credit and checking account combined into one. Within the M1 mortgage holds ALL of your debts, including your mortgage, car loans etc. The twist that M1 offers is that you deposit ALL of your INCOME into the M1 account so that any savings at the end of the month works against the DEBT instead of just sitting in your stagnant checking account.

Try the Online Calculator:

  • With the extra money left over every month working against the debt, the theory is that your debt will get paid off faster. The M1 website has a calculator that predicts how many years you can shave off your mortgage by using their product.
  • I tried the scenario with a $200k home and a $150k mortgage due to be paid off in 21 years. If I were to switch to M1 and apply my $25k in savings against the debt, I could have the mortgage paid off in approximately 9 years. Not bad hey? I’ll bet this could be accelerated even more if you applied the Smith Manoeuvre principles (pay down mortgage with tax deductions).


  • Depending on your situation, the mortgage and other debt will inevitably be paid off faster if you can use every extra dollar towards your mortgage.


  • Rates are fixed at prime with no discount. You can find a variable mortgage that is more competitive at prime – 0.85 (recent mortgage rates). On top of that, since M1 is a giant line of credit, interest is compounded MONTHLY, and not semi annually like conventional mortgages. This makes the gap even bigger between M1 rates and conventional rates.
  • Every day spending is withdrawn from a non tax deductible line of credit.
  • $14 monthly fee. (really don’t like this)
  • Lack of M1 bank machines/tellers.

Who should use this?

  • People who have money left over at the end of the month after all bills are paid. You’re debt will most likely be paid down faster than a conventional mortgage.
  • People looking for a viable mortgage solution to use with the Smith Manoeuvre.

How would you use this with the Smith Manoeuvre?

  • You can create multiple accounts under the M1 plan. If you wanted to start investing using the Smith Manoeuvre with the borrowed money in M1, you can set up a separate account for this to help keep track of the paper trail.
  • I’m not sure if this is possible, but ideally, as you pay down the non-deductible mortgage, you would want your “separate” SM account to grow automatically.


  • With the rates being higher than conventional mortgages along with the $14 monthly fee (I’m frugal), I don’t think that this product is right for me.
  • I think that with discipline, you could pay down a lower rate conventional mortgage quicker than M1 and with no fee.
  • This mortgage ends up reducing the pay back period because it applies all of your savings against the mortgage. This will work with ANY mortgage (if you have the discipline). Why not get the RBC Homeline mortgage with lower rates and apply all your savings against that non-deductible mortgage. You’ll get the increased credit limit automatically on the HELOC side. This would act just like the M1 mortgage BUT with lower overall fees and interest.

Need more info?

I have written another article regarding the Manulife ONE mortgage which includes an analysis of the overall cost in the long term. Check out our Manulife ONE calculations, it’s a real eye opener.

The Manulife One website is also full of info, you can check it out here.

Anyone with M1 right now? Care to comment?


  1. DAvid on March 12, 2009 at 9:29 pm


    Possibly you should take the advice you offered your cousin?

    A look at bank rates for different terms should give some idea of what banks feel interest rates will do in the future. My crystal ball is broken.


  2. ben on March 13, 2009 at 5:35 pm

    Hi All,

    1) Can anybody consisely and right to the point, withought mentioning any other mortgage types, tell me what is the difference between M1 all in one account and a HELOC like TD Home Equity Line of Credit?

    2) Is the interest rate calculated daily on the balance owed at the end of each day for these two?

    3) In your opinion should I go with M1 or TD HELOC or other and why?


    Confused afetr reading this blog, PhD, finance!

  3. DAvid on March 13, 2009 at 7:47 pm


    1) M1 is an all-in-one: chequing, savings, mortgage, LOC, etc
    TD HELOC appears to be just a line of credit — you would likely still need a chequing account, etc. in addition.

    2) Interest is calculated the same in both instances, though you may flow more money through the M1 by depositing your pay cheques in it.

    3) You provide insufficient information on your expectations as to the use of the account to offer advice.

    In most instances, the lowest rate is the best option, given you plan to put similar amounts against the mortgage.


  4. Ben on March 14, 2009 at 7:32 pm

    Hi David,

    Thanks for your reply. As you say, TD HELOC seems to be just a line of credit. When I ask TD what is the difference between their HELOC and M1, they say it is the same, but then they caution me that you may not want to deposit your salary to your account, because they keep the right to close the account at any time, althogh it has never happened before. These and some other uncertainities in their answers make me uncomfortable. Yes theoretically they could be the same if this and that and the other happens, but it seems to be just a line of credit.

    My third question is what “all in one” acoount is better and why, for example M1, Canadian Tire One and Only, or RBC Homeline plan or Scotia’s STEP.

    To me it seems it is all about their rates and fees, so which one is a better if I want to use an “all in one” account.


  5. John on March 24, 2009 at 2:47 pm

    I think Manulife waves the fees for professional associations membership.


  6. Feona on April 2, 2009 at 9:04 pm

    I am just starting to wrap my head around M1 and have read through most of this blog. Helpful for the most part, but I’m still not really sure if it’s for us.

    My husband is a fire fighter with a regular salary and also has a construction business pulling in about $20 K extra per year. I work part time and also have a floral business generating an extra $10K or so a year. Right now we both have some write-offs because of having home offices etc. at tax time. If we switch to M1 do we lose those write-offs? Is this because we’re actually living off of the banks money?

    If that’s the case….that in combination with the fact that we don’t always save money in any given month…I’m about to be on mat leave so we’ll probably have a year of breaking even, maybe its not the right move.

    Our mortgage is up in June – I suppose I should have started thinking about this sooner.

    • FrugalTrader on April 2, 2009 at 10:28 pm

      Feona, yes it would be tricky writing off the mortgage interest in that case because it would be intermingled with your personal expenses. I believe that the m1 has the ability to have sub accounts. Perhaps there’s a way to set up your business under a sub account to keep everything deductible?

  7. Ricardo on April 19, 2009 at 9:17 pm

    Hi folks,

    My wife and I are currently in the second year a 5-year fixed mortgage (at 5.15% with PCFinancial). Our outstanding balance is about 250,000. Given the current lower interest rates, combined with a much higher collective income than when we took out the mortgage, I am considering our options for paying down our mortgage as fast as possible.

    We don’t have any other debt and our monthly expenses are low, so when I do the M1 or Canadian Tire calculations, it looks like switching to one of these products may allow us to pay down the mortgage in less than 3 years. In our case it seems like these “one and only” accounts make sense, as they do not appear to have the pre-payment restrictions or minimum amortization periods of traditional mortgages(?)

    I guess our other alternative is to try to renegotiate with PC for a variable mortgage with more flexile prepayment (if this is possible). I understand that there is a difference in interest cost between a variable mortgage and these all-in-one products, but it seems as though the flexability would outweigh the negatives in our case. I am not sure if there is something I am missing here – any thoughts?

    Thanks very much for any help you can provide.

  8. DAvid on April 20, 2009 at 1:21 am

    You should determine the prepayment options with your current mortgage. Most will allow an annual lump sum payment, the ability to increase payment amounts each year, and the ability to double up your payments.

    My bank will allow:
    – up to 10% of the original mortgage amount each year as an extra payment.
    – increase the monthly payment amount by 10% each year.
    – accelerating the mortgage by paying weekly or bi-weekly instead of monthly (sneaks in one extra payment per year)
    – doubling each payment.

    Thus on a $250,000 mortgage amortized over 25 years, you would pay it off in about 4 years by taking the steps above, even with your current interest rate. As your term becomes shorter, the interest rate charged becomes less important, as there are fewer compounding periods. See dinkytown,net for useful calculators to aid in these calculations

    You should also determine the penalty for early termination of you current mortgage. Usually its 3 months interest or about $3200 in your case, though this could differ between institutions.

    If, after doing this research, you would be better served by switching, talk to your banker….


  9. cannon_fodder on April 20, 2009 at 5:33 am


    I agree with DAvid – I believe PC Financial supports even greater prepayment (i.e. 20% of the original mortgage amount annually) privileges and increases in periodic payments (25% annually).

    Keep what you have but pay down as much as you can and you’ll be ahead (when factoring in the penalty to break your current mortgage).

  10. Ricardo on April 22, 2009 at 9:07 pm

    Thanks guys. Your responses are much appreciated. I contacted PC to see what the penalty is, so I’ll work the sums and determine the best option. Likely I’ll end up using their prepayment options as much as possible, as you have suggested. Thanks again.

  11. Johnnyboi on May 7, 2009 at 3:14 pm

    The main arguement against M1 seems to be the higher interest rate vs variable rate or line of credit rates. However, looking at current offers and rates, M1 is at 3.25% vs 3% currently offered by Banks (best rate I’ve been offered for a HELOC)… is the .25% and $14 monthly fee worth the convenience of M1? (i.e. not having to do the transfer from chequing to LOC myself?) (note, RBC currently charges me $4/month for my current checking account and it sounds like you can get the $14 fee waived for M1 if you have a professional designation (Chartered Accountant?))

  12. Al on May 25, 2009 at 2:35 pm

    Guys can anyoen confirm that the extra payments made towards the National Bank ALL-IN-ONE’s line of credit actually reduces the mortgage balance like the M1 does?

  13. Dustin Serviss on July 2, 2009 at 4:42 pm

    Hello all,I would just like to share that I specialize in Life Insurance and Wealth Management solutions for business owners. I do not sell ManuOne as indicated above. If you are interested in a ManuOne I can gladly refer you to a specialist. As DAvid has clearly mentioned there are other options out there and no the M1 is not for everyone. One should make sure it fits their whole picture for the right reasons before proceeding.

  14. Brian Poncelet,CFP on July 16, 2009 at 2:04 am

    Hey Dustin,

    Why does your web site have a link to ManulifeOne? Or why does “Lee” comment 218 have a link to your web site? If you have a change of heart about M1, no big deal, just don’t play both sides of the fence. Maybe “Lee” can give us an update on his mortgage since he seems to be linked with Dustin. I am in Kelowna at the end of July maybe I can meet both Lee and Dustin at the same time!

  15. Patrick on July 24, 2009 at 8:35 pm

    Right now you can get only the Manulife One in NL, Canadian Tire and National Bank are not available. I will have to say that this account is great for small businesses, or people with self-control…

  16. Mietek on August 27, 2009 at 11:53 pm

    Nobody here has mentionned that practicaly it costs nothing to get out of M1 deal ($100). Bank would charge you (sometimes) thousands of dollars as a punishment for getting out. With RBC I was a prisoner. With M1 I am a free man and in controll of my finances.

  17. Anesh on March 19, 2010 at 1:43 am

    Compounding Monthly makes THAT much difference? … from what I calculated if we take todays prime at 3.25 I’m getting equivalent 0.02% difference to the interest paid by the end of the term but its like comparing apples to oranges when referring to a payment amount from the m1 to a traditional mortgage

    Have I missed something here? also $14 a month is quite competitive to other chequing accounts out there.

  18. Brett on April 23, 2010 at 8:21 am

    excellent advice here..thanks all..could use some help…I make good income, (100K+) and this fluctuates year to year based on O/T etc..My wife makes a low income and this also fluctuates. I understand I would be better off sticking with the traditional methods for saving, but M1 seems very attractive to my situation and feel like I would be further ahead. thoughts??

  19. Brian Poncelet,CFP on April 23, 2010 at 9:46 am


    I had a client who I sold a Manulife One account. They felt that a better approach was to go to RBC and get a discount off prime. Seemed reasonable to me at the time. In helping them do their taxes they paid too much in taxes! Money was left in their bank account from an inheritance for over six months! Plus too much money was left in their chequing account.

    The lost opportunty from paying taxes which could have gone to pay down their mortgage makes the discount off prime useless!

    If you can manage your money very well, a traditional mortgage may work better.

    Since you are self employed M1 or National bank (with no monthly fees) may work better. The other idea is if you get laid off/sick you can miss (if you have the room) payments for months or even years. Can you bank offer that?

  20. Blue on May 1, 2010 at 7:41 pm

    We are currently with M1 and have recently looked into TD Variable rate mortgage at 1.95% plus a line of credit and chequing account. What interest rate do you have to obtain in order to make a conventional mortgage work out cheaper than M1? Is the 1.95% enough of a difference in rates in comparison to 3.25% M1 to save more money? I do realize that the 1.95% is variable and may soon possibly begin to climb. Anyone crunched the numbers with regards to these 2 scenarios?

  21. Brian Poncelet,CFP on May 2, 2010 at 10:33 am


    If you are not self-employed, or keep under $500 in your chequing account or will never lose your job, then the TD is better.

    With the TD you have to make mortgage payments…with M1 you can make no payments if you have the equity.

  22. DAvid on May 2, 2010 at 11:30 am

    See The High Cost of the Manulife One Mortgage | Million Dollar Journey. The calculations there show that if the inputs are the same, the TD product would be cheaper at 3.30% than Manulife One is at 3.25%, due to the difference in the way credit lines are calculated vs. mortgages. In Canada, credit lines are calculated monthly, whereas mortgages are calculated based on the balance at 6 month intervals.The fewer compounding intervals, the better it is for you! Also don’t forget, the Manulife One is also a variable rate, and will increase with the same increments as will the TD Product.

    Finally I would agree with Brian Poncelet above, but word it less drastically: If you have a regular (not variable) income, are disciplined enough to pay additional funds against your mortgage when you have saved some extra cash, and have reasonable job security (or your family has multiple incomes), then the TD is is the far wiser move.

    On a $200,000 mortgage at 1.95%, you will have an extra $230 every month to pay against your mortgage, if the interest rates retain the same difference. I expect an extra $230 monthly against your mortgage would reduce the amortization time considerably.


  23. Denise on June 7, 2010 at 3:50 pm

    These comments have been very helpful as my husband and I are just on the verge of embarking with M1. We are in a very good financial position without it and by that I mean we put everything through our chequing, our mortgage with BNS is at 3.95%, we have $22,000 in savings and a $60,000line of credit which we have never used.

    In simple terms that I can understand (because I’m having difficulty understanding the comments regarding variable rate mortgages), what would you recommend that we do? I also am not keen on the $14 monthly fee.

  24. Steven Johnson on June 22, 2010 at 7:14 pm

    To do mine all over again, I would have avoided M1 and went with BMO Homeowner ReadiLine. Better variable interest rate and no monthly fee. All banks offer a HELOC similar to BMO’s I would assume. Canadian Tire or National’s all in one accounts are also comparable to the M1 and i don’t think either has a monthly fee.

  25. sd on June 26, 2010 at 10:43 pm

    I’ve been a M1 client for about 8 months so far. My M1 rep gave me a few additional tips to save money and get a few bonuses too.

    1) Though we were in the past VERY credit averse, we now pay for everything we can on a credit card (we chose TD infinite Visa for the flexibility, and for the points because we like to travel). When I get the statement, I pay off the entire amount. What this does is allow us to have our paycheques deposited and work against our balance for a month, thereby reducing the interest (which BTW is calculated DAILY, not compounded monthly as mentioned in the article).

    2) If you get the MBNA mastercard, you do get points there, which can be used to waive your $14.00 monthly fee as well.

    I for one am a believer in this account. We have had multiple unsual expenses since we joined, 2 trips (Orlando and St. Lucia), purchase a third vehicle (not really expensive…but still) for our daughter and paid for her first year of university, and we have still been able to reduce our debt far more than additional payments on our mortgage. We are on track to pay off our mortgage in about 5 years, instead of 15-20.

    Best of luck to everyone in this endeavour.

  26. TychoAI on July 3, 2010 at 2:40 am

    I’m posting here, but this applies to the other article “The High Cost of the Manulife One Mortgage”. After reading through the discussion, it comes down pretty straight forward for me, and I don’t really understand why there seem to be sides being taken on this discussion.

    Every single argument against the M1 account is describing options for setting up a variable rate sub prime mortgage in conjunction with a reasonable LOC or HELOC for daily/emergency expenses to do the same thing the M1 does, but for a cheaper rate. Of course that setting up an M1 type system, with a lower interest rate saves you money. That’s not rocket science. Getting that set up, with the ease that the M1 account offers, while also being able to negotiate those favourable rates is the hard part.

    Currently, my M1 account is at 3.25%…I’d be hard pressed to find much lower interest rates on anything, and the inconvenience of maintaining multiple accounts is not always something someone has time for. We constantly negotiate the value of our time vs. the money it costs. The $14 fee is the only item I agree with that I’m not a fan of, but in the grand scheme of things, one can chose to pay it, use the M1 card to earn points and put towards it or tally up the monthly fee costs for the amount of time they think they require to pay up their debt in, and decide whether it’s a debt they can afford. Truthfully, the goal is always to reduce debt, but pragmatically, we always have to balance the time invested to reduce that debt (cumbersome multiple account banking), vs the time gained to have that debt ($14/month) and peace of mind. That’s a decision everyone makes on their own. I’m glad this thread shows people the options, though.

    So in short, I’m perplexed why there are sides to this argument, and I’m surprised by the ardent disapproval some have for the M1 account, when their suggestions are essentially the same function, but with differently negotiated rates and multiple accounts to provide the same functionality. The M1 account is a far cry from the actual conventional mortgage the vast majority of Canadian home-owners have..and that is a fixed rate, multi-year amortization, interest-first mortgage. What’s being discussed as an alternative here is not a “conventional mortgage”..the only thing it has in common with the mortgage is the word “mortgage”. I understand, however, that some simply mistrust Manulife..a lot of that comes to personal experience, and it varies for everyone. I’ve not had any issues with them during my dealings, but I can hardly speak for everyone.

    Good luck everyone.

  27. DAvid on July 3, 2010 at 12:22 pm


    — The concern many had was that Manulife (and FT at first) suggests that the simple action of flowing one’s paycheque through the M1 caused the savings.

    — At the time most comments were written, variable interest rates were available at a 20% + discount from that which M1 offered. Currently RBC (I did not check others) is offering variable @ 2.35% (better if you are a qualified customer), and was dead simple to find. This equates to a savings over a 3.25% M1 of $80 per month on each $100,000 borrowed, plus the account fee. For this sum in savings, I can manage the inconvenience of manually transferring some money from my chequing account to my mortgage account every two weeks, to get an even greater acceleration of my debt reduction.

    — There were also a number of commentators who argued that even with a higher interest rate M1 would always be cheaper. Thus a number of commentators provided clear steps to better the savings.

    — Finally, this entry is now 3.5 years old. None of the promoters of the M1 have come back to report on the success of their mortgage reduction. A number of us (including FT) have either paid off our mortgages, or have nearly paid them off in shortened time lines using other methods described in this thread. For those who are goal oriented, this form of mile-stoning is of great benefit.


  28. TychoAI on July 3, 2010 at 1:11 pm

    @David #283.

    – I can only suspect why the proponents of the M1 haven’t come to report their success. I believe the users of the M1, that don’t employ the greater savings described in this thread, are the type of people sufficiently financially savvy to switch from the real conventional mortgage and speed up their repayments that way, but not interested in devoting the frugality associated with these methods to continue investing time in it and posting here. There are also those that missed out on the M1 savings by dipping into the newly available credit.
    – I’m not far from finishing my house debt using the M1. Prior to switching, I was not aware of these options, so I had a real conventional mortgage for 8 years. I was frustrated when I did find out about the M1, for not having switched sooner. I switched, and things are working for me. 8 years of regular payments did little to reduce my principal (although I still accrued equity due to the market), but having switched, with the extra expendable cash, I’m able to finish entirely in less than 4 years. Clearly, the M1 makes a difference. Switching to a setup as mentioned here, might save me 9-12 months…which is significant, but the different between 17 years ( what was left) and 4, is much more so. I suspect most M1 users are in a similar boat.

    – Lastly, I don’t understand how .90% translates to $960 per year on a $100,000 loan. This is not to quibble, I just don’t get to that number myself.

  29. DAvid on July 3, 2010 at 5:36 pm

    My error. $75 per month.

    My experience contrasts yours. I had a real conventional fixed rate 25 year mortgage. By the 5 year anniversary, I had fewer than 10 years of mortgage left, i.e had made 10 years of mortgage payments disappear. This was completed by using the tools available to me within that conventional fixed rate mortgage, such as increasing my payments as my annual salary increments arrived, putting my tax return against the mortgage, and adding extra payments when I had the cash. My interest rate was considerably below prime for most of this 5 year period due to rising interest rates, so I benefited there as well.

    I have since paid off this mortgage.

    My point remains that you can accomplish the same goals as M1 provides with lesser cost using conventional banking products at your current bank.


  30. TychoAI on July 3, 2010 at 6:39 pm

    @David #285.

    – Ah, alright $75 or $900/year makes sense. I just didn’t know if I was missing something in my calculations. Also, that only stays true for carrying multiple 100,000 instances in your debt. If your debt is only about $100,000 then that $75/month becomes less each month of the year, but that’s true for either type of setup. That might however be the one time where having gradual interest (monthly, with daily calculations) works in favour of the M1, rather than making an extra payment once or twice a year (especially if your extra payment is after the bi-annual anniversary of your interest calculation) if you don’t have a re-advance mortgage.

    – It’s true that during my 8 years with a conventional mortgage I made very few extra payments to the mortgage, and this was primarily out of convenience and lack of discipline to do so. I think the M1 presents a different way of thinking that most people don’t normally do. People get attached to having that money add up in their accounts..they hang on to it, label it things like Emergency Fund or Rainy Day Fund, and then they (me) get hesitant to do away with it in a mortgage because the feeling is that once it’s gone, you can’t get it back if you need to. That is probably be biggest difference the M1 made…the ability to use all my funds against my debt easily, while still feeling like I can access it if I must.

    – I’m not disputing what you say about about achieving the same things with regular mortgages as with the M1. My parents had a 25 year mortgage they paid off in 10 years without knowing or doing any of this stuff at all. They had a regular, 5 year fixed rate each time..not terribly good rates either..they just kept putting everything extra they had against it. It’s possibly to do that. The merit of the M1 is that it allows people to do the same thing more easily, and allows people who aren’t as habitually disciplined with their financial arrangements, to do so. It provides a tool for all those people that fall somewhere in the middle, between those who are very financially disciplined and savvy, and those who aren’t at all, and are incorrigible.

    – I guess what I’m trying to say is that I very much see the merit of discussing and showing these alternatives to people, and explaining clearly how they work and what they do, but I don’t see the merit of discouraging an M1 type product (doesn’t have to be M1 if you have a personal feeling towards Manulife), which is still very good, when compared to what the vast majority of people normally do. The M1 isn’t a poor product, it just isn’t the absolute best one if the most important feature is cheapest option.

    Thanks for all your input throughout, though…to everyone. It’s very informative.

  31. Brad Dillman on July 18, 2010 at 10:01 am

    My experience with National Bank All-in-One (unlike M1, no monthly fee!).

    Just thought I’d offer some feedback here. I switched in July 2008, and my initial goal was not mortgage paydown, but consolidating non-secured debt to a lower interest rate. The HELOC portion was prime, the much larger mortgage portion was a variable prime-0.75% (25 yr amort), and these figures haven’t changed since. Currently that makes the HELOC 2.5% and the variable portion 1.75%. When I opened these accounts, my house was valued at $230k, leaving me a total of $184k (80%) to secure both portions. My mortgage has only decreased from about $157k to $145k, but I have reduced my other debt to around $35k so that it fits in my HELOC.

    I had started with separate loans ($13k @ 13.99%, 18.5k @ 4.9%, $9k @ p+2%, $9.9k @ p = $50.4k). $27.4k paid down in 2 years. Much simpler to manage 1 HELOC than separate loans, and much better rate. I hope this will accelerate, as my wife’s income is probably going up, and we’re now paying less interest.

    I fully intend to pay down the mortgage after I pay off the HELOC. I don’t see any point to paying down debt at a lower rate before debt at a higher rate, even if it’s only a 0.75% difference.

    I already have some RRSP savings, and by retirement I should have a nice federal gov’t pension, so I’m not so keen to put more into RRSPs which might just increase my taxes after retirement. I also don’t see any point to leverage into a TFSA (by leverage I mean using my HELOC before I’ve paid off both the HELOC and variable mortgage in full). I would like to get some tax deductions now as I’m in a pretty high tax bracket. I’ll probably set up a spousal RRSP to get my wife’s RRSP match at her work (why turn down free money?).

    I just had a tune-up with my financial advisor, and he was impressed. He told me only 2 other of his clients had the M1/All-in-one setup, and that he didn’t recommend it for ‘spenders’ – and I note he doesn’t have one himself.

    I agree with him – I’d recommend this style of account (or perhaps a variable mortgage + HELOC, same thing to me) – but not to spenders.

  32. Roberto V. Noriega on July 25, 2010 at 6:51 pm

    As regards to mortgage interest rates, just a reminder that here in Canada the real estate mortgage interest rates are compounded semi-annually, i.e. based on Interest Act of Canada, regardless conventional or subprime real estate mortgage loans.
    The only time one could compound the interest rates on a monthly basis is when loan is not related to real estate mortgage – say unsecured loans, or unsecured LOC, or, secured loans but secured by personal properties. But when real estate mortgage is in the picture then interest rates are presented as compounded semi-annually not in advanced.

    Of course, any interest rates has its equivalent semi-anually, monthly, or daily compounding nominal figure. But once interest rates are quoted then it has to be presented in its semi-annually compounded figure. Otherwise, it would be a mislead to quote interest rate ‘as is’ then switch into monthly compounding or, quote the the interest rate without citing the compounding period but actually the compounding is monthly.
    In the US though, real estate mortgage interest rates are compounded monthly. But not here in Canada.
    I know you are already aware but no harm to reiterate.

  33. M-1 Cherry on September 12, 2010 at 11:36 am

    My wife and I are brand new to m-1. We were with Scotiabank, and what was killing us was the scotialine creditcard. The interest rate was low,BUT the insurance on that card was ludicrous. We owed 23k and the monthly insurance was almost $100. for death and disability. our mortgage was at 5.25%.
    I will see where we stand 1 year from now, then if results are half as good as promised, then I will tell friends about it and hand them my ‘recruiters’

    • FrugalTrader on September 12, 2010 at 12:37 pm

      @ m-1, you can phone the credit card provider and cancel the insurance. To me, credit card minimum payment insurance is one of the biggest industry ripoffs…

  34. MarS on September 13, 2010 at 11:26 pm

    I know I submitted a quite lengthy story of my experiences with the TD and my M1 however have lost track of where the stream of posts has gone. Can you reconnect me somehow

    • FrugalTrader on September 14, 2010 at 9:21 am

      @MarS, I just looked through the moderation queue, and your comment is not there. Perhaps you can summarize for us?

  35. Sandy on November 11, 2010 at 2:06 pm

    M1 is good but a combo solution is better than paying the Prime +0.5% on the whole ammount.
    Example, I have a $300,000 mortgage with RBC, when it cam for renewal recently, I put 150,000 in a 5-yr Variable mortgage at Prime -0.65% and 150,000 in the Royal Credit Line at Prime +0.5%.
    I was pretty sure that I would not be able to pay off more than 150,000 in 5 years :)
    Whatever extra money I have goes in the Royal Credit Line .

    Effectively I am paying Prime -0.075% combined, so it makes more sense to me.

  36. J on April 25, 2011 at 9:10 pm

    We transfered our mortage over to manulife one. We love it and it provides great flexibility over the long term. When we need a car, an rsp contribution or renovations, we have the cash easily available. Keep in mind that this works well when you have disposable income at the end of the month. What we pay extra in interest and monthly service fees has more than been balanced out by the fact that you can be mortgage free in as much as 1/4 of the time as a conventional mortgage. In addition the Manulife One allows its clients to be relatively debt free as you don’t need outside loans which would result in monthly payments. Yes, if you are not good with your money than M1 is not for you.

  37. Phil R on May 16, 2011 at 7:47 pm

    Good cashflow is the issue here. If you have more going in than going out than M1 may be great for you. Interest calculated daily…so get yourself a credit card that has cash back or airmiles rewards, place all your expenses on that card and pay off at the end of the month so that your not penalized. Defer most of your automatic expenses to be taken out at the end of the month. Not only will your paycheck help paydown your mortgage significantly faster by having all your money working for you the entire month but now you get money back and or free vacations. You now have flexibility to do the SM and if your retired, or self employed if you can’t pay the mortgage one month or two…you don’t have to!!! Your house is your bank how cool is that. For people who don’t need it that’s when you should get it, cause when times get tough that’s when they won’t give it to you!

  38. Ozone T on July 16, 2011 at 8:27 pm

    We have had the M1 for about 18 months now. We transferred from a fixed rate, 7 year term with RBC. Our mortgage owing was $112,000 when we moved to the M1. We are now at $67,000. We have a decent but not extraordinary combined income, and we have also managed to max out our RRSP contributions for the last several years, as well as have reasonable discretionary spending (e.g., photography equipment, house work, etc.). While I’m sure the mathematics of more advanced financial schemes may work, my wife and I value our time and simplicity, and frankly, I could care less about devoting time to financial minutiae. So, from that point of view, the M1 works nicely for us.

  39. DAvid on July 17, 2011 at 1:16 pm

    Ozone T,
    If you can afford to pay your mortgage down by $30,000 annually plus maximize your RRPPs, and fully enjoy your discretionary spending, including home renovations, you would appear to be earning far more than a “decent” income. Since you could have paid your original mortgage in about 5 years, based on the numbers you have quoted, the interest rate hardly matters. However for anyone who does not have the income to pay their mortgage so quickly, a lower interest rate can indeed make a HUGE difference to their ability to pay down their mortgage. For some folks the $80 – $100 savings that a lower interest rate brings makes all the difference in reducing their mortgage amortization.


  40. Manit Alberto on July 20, 2011 at 10:03 pm

    Just ran some #s myself and it’s VERY sensitive to the amount you spend monthly. You are right, it’s basically dependant upon you managing to sock away X thousand dollars a month that sits in the mortgage. It’s basically an open mortgage that requires the same discipline as doubling up on a closed would.

    If I’m going to do that, then I’ll just double up the payments instead and if i DO ever need that double up $ it’s available on the HELOC.


  41. Jason on November 22, 2011 at 4:30 pm

    One important thing to remember is that line of credit interest is charged monthly while mortgages tend to compound semi annually. When you consider the lower rate of a competitive variable rate mortgage and the favorable interest compounding the benefit of the M1 account is really minimal, even less so with monthly fees attached. Also, in my experience many people will find they are not paying anything down as paying off a line of credit requires a LOT of discipline.

  42. DoubleAgent on May 25, 2013 at 10:33 pm

    Frugal Trader – I’m not sure if this is mentioned in the comments above as Im admittedly to lazy to read them all but here goes.

    There is alot more flexibility to the Manulife One program than you think. With the Manulife One account you may set up sub accounts which may be fixed or variable interest rates. Inside it I have a fixed rate mortgage with a lower interest rate (comparable to other banks mortgage rates) My smith maneuver account (variable rate) and my main account. Because all my debt is in the sub accounts, the main account where my wife and I collect our income and all our monthly spending comes out of sits in the positive collecting 1.5% (much nicer than your standard chequing account) Once a year I can make up to a 20% lump sum to the original principle value of the mortgage, and the smith maneuver account being variable can be withdrawn from or paid down whenever I want. The flexibility of the sub account system, the decent interest on positive values, and the ability to lock in your interest at a lower rate on some or all of the debt in the account pulls the M1 ahead as a clear winner in my humble opinion.

  43. P L Crompton on January 27, 2016 at 1:13 pm

    Stay away from Manulife! I dealt with Jessica at their Alberta office and the lack of professionalism amazed me. She should never deal with anything financial. She is better suited to selling nail varnish at Shoppers Drug Mart.

  44. Ter_eh on May 3, 2016 at 12:53 pm

    I highly recommend the M1 mortgage if you have the discipline to respect the available credit.
    There are hundreds of bank machines available through The Exchange Network (almost every credit union), and recently they have reported over 800 new Manulife Bank machines across canada. I see they have been added to a couple of local Mack’s milk. Problem solved.

    The Manulife integrated credit card feature is very convenient and likely offsets the $14 monthly fee for most people who will never pay credit card interest again.
    You can’t get more simple to run standard financials for your household.
    The sub accounts are simple to use and provide clean accounting on investment loans for tax time.
    My house will be paid in 7-8 years. I’m laughing.

  45. Andy on September 26, 2019 at 11:34 am

    Hi all, I need to specifically understand from people that have the ManulifeOne (M1) account that when a “sub-account” is opened if that portion is “re-advanceable”?

    I have an M1 account and am struggling to understand this.

    I currently have $10K available in the Main M1 Account. I talked to an agent and what they told me is that I would open a sub-account with that $10K as DEBT which I can extract and make an investment. The interest would be tracked separately on the “main” M1 account by notation “Interest paid sub-account 1”. That takes care of the SM need to individually track the interest paid for taxes and capitalizing the interest.

    What I would like to know is when I make payments into the Main Manulife One account will the Principal paid down increase the sub-account?

    Month 1 /Day 1: Payment made to main account for $1000.
    Month 1 / Day 30: Interest is charged at the end of the month for $500.
    Month 2 / Day 1: sub-account available balance “automatically” increased by $500??

    Is this how the re-advanceable sub-account works?

  46. Jacob Mileta on April 24, 2020 at 1:25 am

    Hi guys. I’m going to try to make this as simple as possible so you can understand the manulife one and why its the most friendly line of credit/mortgage solution in stead of a normal vanilla mortgage.

    It’s a checking account. That means if you put in 5,000 dollars cash for the month you save 3-4% interest on that right away. Just by parking the same 5000 every year you can save 150-200 dollars. That is part of why the fee is 15 dollars. The fee is waived if you have a certain balance I’m told.

    It’s an investors line of credit. That means you can have as many sub accounts as you could need. If you have a business or a tax deduction to track, you create a sub account. Every single account gets published every statement with a positive negative balance included.

    It’s an optimized mortgage. Normal mortgages are blended equity and principal amortized over 25-30 years. The Manulife One is a no obligation mortgage that can be opened for infinite years. This means it’s cheaper to carry. Vanilla 200k mortgage at 3% 30 years is 843.21 per month to have it paid in full. It only costs $500 a month to carry the same 200k mortgage at 3% for 100 years.

    My opinion is – This means a real estate investor can get 3-4% interest on their bank account. The business owner can get 3-4% tax deductions all organized into the same bank account. Then the real estate investor can get 3-4% appreciation on their home for the smallest possible carrying cost. It’s all rolled into the Manulife One.

    If your fiscally responsible you will always pay down a mortgage faster than average just like if your a professional golfer you can drive several hundred yards with a cheap club.

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