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  • Every day spending is withdrawn from a non tax deductible line of credit.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?

If you would like to read more articles like this, you can sign up for my free weekly money tips newsletter below (we will never spam you).


  1. Chris on February 8, 2007 at 1:51 pm

    I’m an M1 customer and feel the need to point something out, which may or may not be true with RBC’s Homeline mortgage but is based on my experience with a traditional RBC mortgage. With my old, traditional RBC mortgage, when I wanted to make extra mortgage payments on a monthly basis, the maximum extra payment I was allowed to make couldn’t exceed my regular payment. In other words, if my regular payment was $1700, my extra payment in a given month could not exceed $1700. With M1, I can deposit any amount that I want into the account to reduce the balance, which is ideal because in a typical month my excess cash is well over what a traditional mortgage payment would be.

    With respect to your issue with M1 having few bank machines, the way I get around that is to have a zero-fee bank account elsewhere and use those machines when I need cash. Otherwise I pay with Interac.

    As for the $14 monthly fee…..yeah, definitely not ideal. But I feel that the benefits of the account and the flexibility it provides you with definitely outweigh the $14 charge.

  2. Fernando on February 8, 2007 at 1:52 pm

    Nice summary – I wish this was around before I read (twice!) the entire thread on Mork’s board… :-)

    I looked at M1 and came to the same conclusions as you. I am using Scotia’s Total Equity Plan to implement the SM. The limit on the HELOC does not increase automatically but it appears that it is an easy process that one can start online…


  3. FrugalTrader on February 8, 2007 at 2:22 pm

    Chris: Good comment Chris, good to see the point of view of a M1 client. Apparently, the $14/mo fee can be avoided if you’re part of a professional association?

    Fernando: Yes, i’ve read through that thread a couple times also, lots of good info there.


  4. mork on February 10, 2007 at 11:33 pm

    It ain’t for everyone, but if you are the type of person who has taken the time to crunch some numbers on M! versus alternatives, then you are already ahead of the curve.

    One of the disadvantages you listed is confusing. What sort of line-of-credit exists where every day spending can be tax deductible?

    With M1 (or any LOC or loan) you can go ahead and deduct the interest associated with investments (M1 offers “sub accounts” to help track this seperatley, but it isn’t neccesary, you can track it yourself). Likewise spending on expenses for your investments can be deducted – it doesn’t matter where the money comes from – an M1 account, a chequing account, a loan, etc.

    Back to topic.. I’m still with M1 myself – the coming months will determine if we stay with M1 or not.

  5. FrugalTrader on February 11, 2007 at 3:49 pm

    Hi Mork,

    Thanks for stopping by and posting your personal experiences with M1.

    The disadvantage I list about using your line of credit as everyday spending is just that. Since your M1 account is used for EVERYDAY spending (ie. all your income gets poured into it), you are FORCED to use a line of credit for consumer spending.

    Do you use M1 with the Smith Manoeuvre?


  6. David on February 13, 2007 at 8:33 pm

    FT: “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 believe that if you look closely at the numbers in the calculator, you will find that you must leave an additional $300 per month in the M1 account to achieve this 9 year amortization. The calculator will NOT allow you to enter numbers equal to your current mortgage, without indicating no benefit. Since you are paying more, of course your mortgage balance will drop. If you play around with the calculator, you can actually have it show numbers where it indicated that your total principal & interest with M1 is higher than the “Old Way” yet it indicates a savings in the bold print!

    Try it and see! Just pad your expenses to absorb all your net income except your current mortgage payment.

    IF your only debt is a mortgage, and you have a regular income, there are more efficient ways to pay your mortgage than through M1.


  7. FrugalTrader on February 13, 2007 at 8:40 pm

    Good points David. The higher rates really hold the M1 back. Great for people who don’t have the discipline or patience to pay off their mortgage on their own but more of a gimmick that doesn’t work to the financially savvy.

  8. LB on February 16, 2007 at 10:06 pm

    You use one of the other banks readvancable mortgages with a fixed rate portion at whatever the current 5yr rate is. Set up the amortization period so that your mortgage payment would be equal to half your salary for the same time period. Have your mortgage payment double to equal your salary. Then use the variable portion of the HELOC to pay your day to day expenses. This will allow you to work exactly like the M1 account except with a lower rate on the “mortgage” portion of your HELOC. You would pay off you mortgage faster than using M1 since it is a lower rate and you would still have all the benefits.

  9. FrugalTrader on February 17, 2007 at 8:25 am

    LB: Good points, but I still don’t recommend people using borrowed money for day to day expenses as it is non-deductible.

  10. LB on February 17, 2007 at 5:48 pm

    FT: I agree. I wouldn’t recommend using borrowed money for day to day expenses. I would actually prefer that any borrowed money be tax deductible.

    I was just putting out another option for people considering using M1. What I did instead was use the M1 calculator to see how long it would take to repay my mortgage using M1. Then I calculated the extra amount that I would need to add to my mortgage payment to pay off my mortgage in the same time frame as the M1. It still left me with money from my paycheck after my mortgage payment (due to the difference in rate and compounding).

    Another option is if you are using the SM and the income from your investments are enough to cover your day to day expenses, you can modify your stratergy and use that income to cover your expenses.

    The point is that there are other alternatives to the M1 account that will yield the same results.

  11. David on March 6, 2007 at 10:25 pm

    Has disappeared?
    Mork’s blog has received no real updates since the summer, and the activity on the Manulife discussion was being updated at irregular intervals. It has been unavailable since Friday, and I wonder if Mark has decided to step out of the blog world into other activities? The disappearance of the blog’s information is unfortunate, as it was one of few open discussions on the topic.


  12. Josh on March 7, 2007 at 1:05 pm

    If you have a regular mortgage and have any liquid cash outside of that. That’s the banks money – you owe them that. It’s exactly the same as ‘using borrowed money for day to day expenses.’

    In fact it’s worse. As an M1 client I always give every cent I have to the bank and only take back what I need to live. Whereas you’re paying them as little as you can and ‘pretending’ like the rest of the money is yours. It’s not.

    On top of this – if you have a regular mortgage and have any money invested outside your RRSP that is the banks money too. Even if you aren’t doing the Smith Maneuver exactly if you have any money invested outside your RRSP, you’re paying more than you should because you’re sitting at exactly the same spot if you owe 150k and have 5k invested. Or you owe 150k put your 5k towards that and then reborrow it to invest it. Except in scenario 2 you can now write-off or ‘expense’ the interest. Why don’t you want to make an extra 3% (or whatever) just from being able to write it off?

    Sorry – but I have this argument too often with people who try and justify NOT getting M1. It just doesn’t make sense not to.

    Although – I must say if you aren’t really really really good with your money. I warn you about having huge amounts of credit. I am really good with my money. But it’s hard not to think “I already owe 150k… what’s another 2k…? It won’t cut a year off my mortgage! It’s peanuts in comparison!”… watch out for that mentality. It can become a real problem and is echoed by others I know with HELOC’s.

  13. Joe Corson on March 18, 2007 at 12:00 am

    I have the RBC VIP package: handful of checking and savings accounts plus a couple of credit cards. I also have a RBC mortgage (in yr #3 of 5 with 4.59% rate), and a nonsecured line of credit at roughly 8%.

    I’m now in the process of setting up a Homeline, figuring I would dump the balance of the credit cards and line of credit into the Homeline, and then automatically transfer my salary deposits so that they achieve a M-One like plan as was described.

    1 point and 2 questions:

    – RBC is asking me for $750 in notary fees to set up the Homeline – depending on duration, that may add up to more than $14/month of M-One.

    Q1- The way M-One and Homeline calculate interest, if I leave salary and savings in there for 1-2 weeks at a time as permitted, it seems as though M-One puts that money to work for me better, whereas with Homeline I would have to manually apply it to my mortgage, otherwise it is just paying back the credit line. If I know I need the money for an upcoming bill, I would be inclcing not to lock it into the mortage though. Am I missing somehting? Should I automatically apply my monthly payment’s worth of cash to the mortgage knowing I can alwasy pull it from the line of credit if needed?

    Q2- Lastly, does anyone know if Homeline can act as a checking account – namely have car lease payments etc automatically draw money form it vs drawing form my checking account? That would allow me to not always be on the trigger moving money back and forth.

    Thanks for the great reading…

  14. FrugalTrader on March 18, 2007 at 7:15 am

    Joe: With regards to the $750 fee, shouldn’t RBC waive this fee if you are a “loyal” customer? Perhaps if you ask, they may waive it.
    Q1: If you want the homeline mortgage to work like the M1, then yes, you will have to apply your “excess” income against your mortgage. That way, your mortgage gets paid off at a “lower rate” (lower than M1), AND you have that increasing credit line in case you need the cash.
    Q2: I’ve never used the homeline product, so i’m not sure about this question, perhaps one of our readers can help here. However, I cant’ see why you wouldn’t be able use the account like a chequing account. I can use my PLC from CIBC like a chequing account.

    If you have a lot of consumer debt, and RBC insists on charging the $750 fee, why not get a regular HELOC (hopefully free), and pay off your consumer debt? It would basically serve the same purpose, but you can keep your current low rate mortgage in place (4.59%). Any excess income that you have can be applied against the HELOC, and if you need to withdraw, you can.

  15. David on March 18, 2007 at 1:37 pm

    On the Notary Fees: This is often a simple flow-through of costs. Offer the Banker that you will find a less expensive Notary. All they do is witness signatures and notarize the fact. The Notary will have to attend a location where you & the banker are. IF you can find a mortgage specialist that will come to your home, have the meeting at the notary’s office!

    The application of your salary to your debt only affects your last dollar. As long as you are holding debt in your LOC, there is no sense in paying more against your mortgage. The real savings with your plan come from the 1.4% reduction of your mortgage interest rate, and the 2% by having a SECURED LOC. As long as you are paying these as rapidly as possible, you will maximize your savings. For instance, on a 20 year, $150,000 mortgage, you will save about $120 in interest costs each month simply by retaining your current interst rate. If you add that $120 to your payments, you will see a rapid reduction in your debt.

    Have a look at: for a further discussion of this issue.

    You can make all the electronic transfers you wish (i.e. bill payments, etc) from the Homeline. I am uncertain how outside automatic debits would work. However I have two comments on the issue: for regular structured payments like a car loan, just set up a recurring automatic transfer of the appropriate amount for your car payment from your LOC to your chequing account. Then it’s there waiting for the automatic debit.
    OR, don’t worry about putting every last dollar in your LOC. IF you have a $1500 paycheque every two weeks, and you spend it to $0 in that time, your interest savings in the LOC for the two weeks are $1.73. Have a Timmy’s coffee instead of Starbucks once a week, and you’ve recovered the costs of managing your account in the fashion you describe. Rather than worrying about the pennies you would save by running every dollar through your LOC, focus on the savings your interest rate has provided.

    Finally, in addition to FT’s last paragraph, once the HELOC reaches $0, apply the income you had been using to reduce that account to your mortgage, as a double-up payment.


  16. FrugalTrader on March 18, 2007 at 1:50 pm

    David: Great comment! Are you currently using the RBC homeline mortgage? IF so, do you use it in conjunction with the Smith Manoeuvre?

  17. Joe Corson on March 18, 2007 at 3:30 pm

    Thanks for the answers and suggestions, especially the Horton’s one – is their decaf any cheaper than regular? :-)

    With regards to Frugal’s comments in 14, even with the Homeline I keep my original 4.59% mortgage. M-One gives you one interest rate on the whole sum (right?) but Homeline let’s you keep your original mortagge intact, as well as the option of splitting it into two mortgages (one variable, one fixed perhaps) that both sit “alongside” your prime HELOC, each at their own rate.

    So to your commetn of why not just take a regular HELOC and avoid the $750 fee and still maintain the lower mortgage interest rate – I *am* still keeping that lower rate, and I guess the “Homeline” spin gives me a couple of perks such as multiple mortgages and a dynamic line of credit that rises to the value of the home as they are paid off (versus a fixed line of credit).

    I’m a bit of a newbie, so I may be missing somehting here. Thanks for the great assistance.

  18. Chris on March 18, 2007 at 4:11 pm

    M1 also gives you the option of locking in a max of 75% at a lower fixed rate – currently 5.25% for a five year term.

  19. David on March 18, 2007 at 6:29 pm

    You are right in your comments in 17, however, you might be better able to negotiate a lowering of the $750 fee at renewal if RBC wants to keep your business. You may also find that the options to apply split mortgages, etc will only be offered upon the expiry of your current mortgage term. If the Fee is not a worry, make the switch when you are ready.

    While Manulife gives you the opportunity you describe, I am uncertain if the combined accounts behave as the M1 does. I believe that lower rates are offered only with a traditional type of amortized principal & interest payment. I understand that the ‘interest only’ option of the M1 is not available, nor the ability to pay down any amount your wish. Thus taking the fixed interest route changes M1 into something akin to the offerings of the other banks.
    That being the case, there is little impetus to switch!


  20. Max on May 2, 2007 at 6:20 pm

    Talked to a CFP about this today. I have a Homeline with RBC and he brought up Manulife One as a great alternative. What he said was the interest on the Manulife One is calculated “daily” which is it’s big advantage, so short term things like full paycheques and the like get factored in immediately.

    I don’t know what Homeline does, trying to ask my bank.

  21. Max on May 2, 2007 at 6:24 pm

    Oops, meant to add. Who cares about 14% and a higher rate if it shows that the amount you carry will allow you to pay of in 50% of the time. You are obviously saving tens if not hundreds of thousands by shortening your amortization that much. So does the Manulife One @ 6% really matter then? Does X year @ $14/month really matter? $164/year for 8-9 years is still FAR less than tens of thousands of dollars.

  22. Chris on May 2, 2007 at 6:40 pm

    The biggest weakness with M1 is the rate. I went from Manulife One and 6% to an open BMO mortgage at prime – .85%, which is saving me over $2K in interest per year.

    The only difference is that rather than having my paycheque deposited in my Manulife One account and being applied to my mortgage immediately, I have to call BMO and have them transfer the money to my open mortgage.

  23. FrugalTrader on May 2, 2007 at 7:59 pm

    Max: With the interest calculated DAILY it works AGAINST you, not with you. Typically, mortgages are compounded on a semi-annual basis (in Canada). So lets work out the things that m1 has against it:
    1. higher rate
    2. compounded monthly
    3. monthly fee.

    If you have the discipline, you can setup another re-advancable mortgage and set it up similar to the m1, but save interest $$$.

  24. Max on May 2, 2007 at 8:49 pm

    The interest isn’t compounded daily, the daily amount in the LOC is USED in the eventual calculation…it’s not compounded daily, just calculated daily. BIG difference.

  25. Max on May 2, 2007 at 8:49 pm

    The interest isn’t compounded daily, the daily amount in the LOC is USED in the eventual calculation…it’s not compounded daily, just calculated daily. BIG difference.

    It makes sense that it’s that way as any other way wouldn’t make any sense for the product.

  26. Max on May 2, 2007 at 8:51 pm

    Gah not sure why that posted twice. What I meant to add was for my situation running the numbers with a CFP shows M1 as a SIGNIFICANT savings even after the slightly higher rate and $162/year fee. Along the lines of mortgage going from 20 years to 9.7 and a total savings of about $130k in interest.

  27. FrugalTrader on May 2, 2007 at 9:31 pm

    Sorry Max, I made a mistake, I didn’t mean to say that the interest was compounded daily, I meant the interest is compounded MONTHLY in a HELOC. Which still works out higher than if the interest is compounded semi-annually.

    You will get savings b/c you are applying ALL of your income towards the product. But why not apply the same amount to a mortgage with a lower rate? You will end up paying it down even faster than the m1.

  28. Max on May 2, 2007 at 9:36 pm

    The benefit I “possibly” see (im not sold on this btw) is the ability for transient $ to apply temporarily (paycheques etc). That’s not necessarily $ I want or can sink into the mortgage, but it’s temporary presence in that account to lower the interest for those few days (particularly with two decent incomes) has some possible attractiveness to it.

    I’m unsure if that is true with my HELOC.

    Investigating :)

  29. David on May 2, 2007 at 11:48 pm

    The only way you will reduce your mortgage amortization from 20 years to 9.7 and save $130,000, is by leaving a considerable amount of cash in the account on a monthly basis. While putting your paycheque into the M1 account will save you a few dollars in interest, it will not save you the amount your advisor indicates. Have a look at my previous messages, and follow up on them. If you run the Manulife calculator, and pad your expenses to match your current situation, where you spend all but your mortgage payment, you will see the actual advantage. You can then increase your ‘savings’ in small increments and see how the application of those amounts affect your mortgage.

    Also remember, if you have short term debts, the Calculator will add their value to you loan in perpetuity. For example, if you factor your $500 per month car loan into the calculator, but only have 4 months left to pay on that loan, the $500 is added to your M1 paydown for the rest of it’s life.

    By adding these $hundreds to your monthly mortgage, it has the appearance of painlessly paying the mortgage faster, when in fact, the car loan you figured to have paid off in 4 months is applied to your mortgage for 9 more years. If you have the ability to make that commitment in the M1 case, you should similarly do so with a lower cost product.

    Have a close look at the product before you jump in, and also ask your advisor how much Manulife pays him for the referral!

    Have a look at the site for more information as well.

  30. FrugalTrader on May 2, 2007 at 11:53 pm

    Well said David, my thoughts exactly.

  31. Max on May 3, 2007 at 12:31 am

    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.


  32. David on May 3, 2007 at 1:10 am

    Chris said: “I went from Manulife One and 6% to an open BMO mortgage at prime – .85%, which is saving me over $2K in interest per year.”

    Is this the same Chris who authored messages 1 & 18? If so, were you able to take advantage of Manulife’s ‘money back guarantee’ upon moving to the BMO product? Your experiences would be of interest.

  33. Chris on May 3, 2007 at 10:45 am

    Yes – same Chris. I was with M1 for over a year, so I didn’t qualify for the money back guarantee.

    Truth be told, I still think M1 is a great product for those who couldn’t be bothered to be hands on with their finances and put extra money on their mortgage manually each month, but if you are a little proactive there are much better options. It’s too bad because their customer service is easily the best of all the banks I’ve dealt with over the years.

  34. David on May 3, 2007 at 12:21 pm

    Max: I’m glad that you found your way through the glitz, to the heart of the matter, and were able to discover for yourself the reality of this financial situation. Please, continue to apply this skepticism with your CFP. It appears to me (and should to you) that his suggestion for you to move from your current banking mix to M1 was not based on your best financial interests.

    Chris: Thanks for your candor. While M1 may be an advantage as you describe, I would hope that people would be a little more ‘hands on’ with their finances, and be more financially fit. I am also a bit upset by the subterfuge supplied in the calculator, as it does not really tell the consumer how the numbers placed in it are being managed.

  35. Max on May 3, 2007 at 1:40 pm

    He’s not my CFP right now. I am interviewing CFPs this week and he was one of the ones I interviewed.

    Don’t worry, interviewing more :)

  36. […] Manulife – ManulifeONE Mortgage  (read my Manulife One Review) […]

  37. […] Brad, I wouldn’t use the Manulife One mortgage. I would stick with the existing mortgage and pay it down as fast as possible. The M1 mortgage rate is too high without any real benefit to those who can pay down their mortgage themselves. It’s really a big negative once you factor in the penalty you would have to pay to cancel your existing mortgage. […]

  38. […] Manulife One Mortgage Review […]

  39. Ron on June 28, 2007 at 5:07 am

    Thank you all for your thoughts and ideas. I got to this web site because I was unsure of the unconvential Manulife banking service. After a detailed analysis I have found that we will save about $3000 per year with the One account in our rather unique situation. We have a conventional mortgage that is coming due and want to lock in the rate for 5 years. The Manulife rates are slightly lower than what the banks are offering. We have a $100,000 loan for a small trucking business, and the Manulife rate is 1.5% lower than the truck loan. With the business and our fairly healthy paycheques we have lots of cash at times but need an LOC at other times. We now have to pay a $355 annual business review fee. And I now have to shuffle money amongst 4 accounts. So we will save significant money and my banking chores will be simplified. I am signing up tomorrow!

  40. Brian Poncelet, CFP on June 29, 2007 at 12:20 am

    Here it is from the horses mouth! Manulife One is good for some people, but not the best for the Smith Manoeuver! As an advisor I get paid on the Manulife One. But if you really want the best, (right now) there is only one large Canadian bank which has the best product…no fee account, up to 10 ATM withdrawals per month, (any bank). But advisors don’t get paid and mortgage brokers don’t get paid! I still suggest people look into it if they want to to do the SM.

  41. FrugalTrader on June 29, 2007 at 8:18 am

    Brian, are you going to keep us in suspense? :) Which product is it that you recommend? The RBC Homeline mortgage?

  42. Brian Poncelet, CFP on July 3, 2007 at 10:07 am

    Hello Frugal Trader,

    Not RBC (lots of limits on their product) As a financial advisor, I can’t tell you everything!
    Unless of course you are my client! Feel free to call me.

    Ps. the bank is helping my clients pay for part of their penalty, if they wish to break their mortgage.

  43. Rick on July 4, 2007 at 10:03 am

    Has anyone factored in the ability to carry/accumulate your expenses throughout the month on an accompanying Master Card and having it’s balance paid out at the end of the month automatically (with no interest cost) thereby having the balance of your “mortgage” remain lower thoughout the month until the final day in a program that calculates interest daily?

  44. David on July 5, 2007 at 1:08 am

    Every $1000 you put on your CC saves you $5 over paying out of the account at the beginning of the month. If averaged over the month, it saves you $2.50/$1000.

    $150,000 at -0.85% difference in mortgage rates saves about $106.00 per month.

    Your choice.


  45. Rich on July 7, 2007 at 4:05 pm

    Blogs are a form of knowledge transfer. People helping other people with their experiences and expertese. I don’t know why, but your post struck a nerve with me. If you want to help others in this format please do so. If you want to run a “teaser” campaign to drum up business, well, that’s where I have the problem. Just my opinion, but that’s how I feel.

  46. Brian Poncelet, CFP on July 10, 2007 at 3:17 pm

    Hello Rich,

    Sorry I hit a nerve. Here is some important information people need to know about the Smith Manoeuver. Pages 75,& 76 of Fraser Smith’s book “Is your mortgage tax deductible?” talks about interest capitalized. My understanding is Manulife One does not do this automatically. You must do this your self once a month. They are working on a solution later this year. Most mortgage brokers have not read the book and have no banking product that has this feature, to offer. Also, most banks will not capitialize the insterest automatically!

  47. Carson on July 13, 2007 at 3:00 am

    I find myself overwhelmed by the amount of information I’ve read over the last few weeks regarding arguments for and against the M1 account and it’s alternatives such as a conventional mortgage and a HELOC.
    I would like to post this information and hopefully some saavy and impartial individuals will comment and help me out on what my wife and I should do…

    Our situation is as follows:
    Mortgage matures Aug. 1/2007
    Still owing: $100800
    House is worth: $510000
    – $66000 cash (most of which is earmarked for items to be purchased in the near future such as a new car and renos to the house)
    – $4000 cash in savings and chequing accounts
    – monthly income: $6700
    – monthly expenses: $3750

    I’m starting to lose sleep over this as time draws near to make a decision. I do like the M1 option in that it will save in interest and shorten the amortization to about 3.3 years as opposed to 6. But I’m not one for banking fees and the like.

    Lastly, we would like to consider buying a vacation property some day as well so a LOC would be very helpful in achieving this…

    Anyhow, I’m looking for any comments and hopefully suggestions.

    BTW, our CFP did not recommend M1 nor a similar product that she sells based on the fact the that BOC is trending upwards?

    Thanks in advance…


  48. FourPillars on July 13, 2007 at 9:01 am

    I looked at the M1 with a co-worker of mine recently and I can tell you that their “calculator” is garbage. There is no way that a LOC can shorten your mortgage from 6 years to 3.3.


  49. FrugalTrader on July 13, 2007 at 9:09 am

    Carson, the m1 mortgage, in my opinion is gimicky. You can obtain better results by getting a lower variable rate and putting your savings towards paying down the mortgage.

    The reason a lot of people consider the M1 mortgage b/c it’s a way to implement the Smith Manoeuvre. If you use your LOC towards a vacation property, the interest will not be tax deductible (unless you rent it out). You would probably be better off simply getting another mortgage for the property instead.

  50. Brian Poncelet, CFP on July 13, 2007 at 11:20 am

    Hello Carson,

    Hear is the goods… if you want to save money build your net worth, go variable with a discount & HELOC (with a discount off prime as well) Go to a bank that will allow you to capitalize interest. (Smith Manouever) See my comments #46.

    If you can’t sleep at night go fixed and forget about the Smith Manouever. If interest rates go up much higher…say prime at 7%+ your vacation property will become much cheaper very soon.

    As far as inetrest rates go, I have done this for thirteen years, variable is almost always better. Lots of studies going back 40 years to show that you pay extra for the fixed rate.

    Also, if you were worried about rates your bank/CFP could have rate protected your mortgage 120 days! M1 is 90 days! (Rates could have been fixed based on rates April 1st,or May 1st 2007) So you would have got a five year fixed at about 5.09% …what happened?

    As for as M1 calculator is concerned, if you have lots of cash the numbers will look great…Why? The cash goes against the mortgage! I have sold the M1 mortgage but is not for everyone. Example, if you have a steady pay cheque little cash in the bank then consider the other banks. If you are self-employed where cash is bad one month and next month you can buy a BMW…M1 can be great! Plus corporate chequing accounts pay over 4%! This is not possible at any bank, unless your corporation has over $250,000!

  51. David on July 13, 2007 at 12:31 pm

    If you placed the approx $3000 that you are saving per month against your mortgage, in addition to your regular payment, it would be paid out in about 2 years.

    You have about $70,000 in savings at a rate lower than you might have gained by placing that sum against your mortgage temporarily, as the savings accumulated.

    If you placed the $70,000 in savings against the mortgage, and put the $3000 / month against it as well. Your mortgage would be paid out in about seven months. You could have a $400,000 LOC backed by the house during this period to cover any unexpected expenses, and of course, the $3000 per month is flexible, and can be spent instead of placed against the mortgage if needed, although it prolongs the mortgage.

    Depending on the car you buy, it may be available on a low interest or zero interest deal — it might be cheaper to put your savings into the mortgage, and use the manufacturer’s deals to save more money.

    Using savings for renovations is a mixed option. If the value of your renovations (added value to your house) increases at a faster rate than your interest costs, borrowing may make sense. If not (usually renovations do not get full value on resale) then having the savings may work to your advantage.

    I echo Brian’s comments on your helpful CFP.


  52. David on July 13, 2007 at 12:37 pm

    Further to my earlier comment:
    After your mortgage is paid in seven months, you should have some $4700 in savings each month to apply to other goals. If you do not have a stellar retirement plan in place, I would suggest that a sizable portion of that income be diverted into appropriate investments for that future. You have a very comfortable income just now, and will likely want to continue that into retirement.


  53. Carson on July 13, 2007 at 4:27 pm

    Hello all, thanks so much for your responses. I’m very grateful.

    Brian P: Although in the back of mind I was told (4 years ago) when we were renewing our mortgage with the TD that we could renew as much as 3 months in advance locking in a rate, when the time came I went to the branch we dealt with and found the mortgage guy wasn’t there, instead I spoke with some “wet-behind-the-ears” person who took me into (the exact same office I was in 4 years earlier) and told that that mortgage specialist was not at this branch and he could help me. I proceeded to ask for a mortgage rate to be based on the fact that we’d like to remain with the TD and we’re looking for the best rate they could provide us.
    So this “kid” says that they couldn’t do this and we would have to wait until the mortgage renewal notice was sent to us.
    I guess, I should have pressed the issue but unfortunately I didn’t. So now I’m pissed with the TD and it’s band of idiots and will not set foot in that place ever again.

    There are other issues we’ve had with TD as well but I will leave that to another time…

    Thanks again to you and the others for your comments.


  54. Brian Poncelet, CFP on July 13, 2007 at 4:51 pm

    Hello Carson,

    We all learn from our mistakes! I have made some myself over time.

    Rule #1 For rate protection assume the bank or the CFP (that’s me) may not be looking out for you! Mark in your day timer etc. 120 days or more before your mortgage is due!

    Why do the bank employees have a take or leave it attitude? They get paid every month! Why do some financial planners not remind their clients when the mortgage is due? The money is zero or in M1’s case small. The real story is your mortgage is probably your biggest expense, if you can do well then the battle for retirement will be better! The important thing is, you now know better, and hopefully others may learn as well.

  55. FourPillars on July 13, 2007 at 5:16 pm

    Carson – I’ll agree that they are idiots at TD. Their computer system sucks as well.


  56. Bruce on July 14, 2007 at 2:43 pm

    After reading all of the blogs I am confused on one point, for the average person with the simple goal of paying off his/her mortgage the fastest and the cheapest, which is the best way to do it? I am in an M1 account now and find it has worked well, but if another product will save me noney and do the same thing I would like to make the move sooner then later.


  57. David on July 14, 2007 at 9:15 pm

    No one here is able to make that decision for you. If after reading the information posted here, the links included on this page, and the Red Flag Deals discussion on the topic, you still cannot arrive at a decision, possibly you would be happiest with the product you currently use.

    The ways that you use a banking product will determine if it is the right one for you.


  58. Brian Poncelet, CFP on July 16, 2007 at 9:58 am


    If you are self-employed, or have lots of cash that you are using for the M1 account good for you!

    If not, prime is now 6.25%, you can get a rate of 5.4% (prime with a discount)or better, free chequing, no atm charges, etc. What sounds better? If you have any questions, please talk to your advisor or myself, if you are in the Toronto area.

    Ps. If you are trying to do the Smith Manouever, a lot has changed since Fraser has written his book. Fraser talks about Manulife One, as a good bank to capitialize interest rates (see my comments on # 46) Now there is another bank…but they don’t pay advisors or mortgage brokers…that is why you never hear about them!



  59. FrugalTrader on July 16, 2007 at 10:17 am

    Brian, if you don’t mind disclosing, which “other bank” will allow you to capitalize the interest automatically? We all know that we can manually capitalize the interest with any re-advancable mortgage. Is the bank a nation wide chain? I’m thinking that you’re probably talking about a local credit union.

  60. financialmoron on July 23, 2007 at 10:08 pm

    I would like to give you the whole picture of my situation, and then tell me if this program Smith-Manoeuvre would still work with me NOW or would it be better to avail of it LATER.

    My family and I are staying in our present duplex with a present market value of $350 K or more, with a balance of $223,733.

    We have a rental property, a condo/townhouse, which I got just last June 16th, worth about $250K or more, with a balance of $193K.

    We are taking possession of our new home either mid/late Sept or early October. We don’t have a possession date yet. This one would be our principal residence then, and our present duplex would be another rental property.

    If I get Manulife One for my present home, the duplex, can I port this program to my new home that I’d be taking possession later? What can you suggest I do?

    I also would like to refinance my duplex to get the equity so I can buy more properties.

    Would anyone be able to give me suggestion or advice on this? Thanks.

  61. Man From Atlantis on July 24, 2007 at 1:23 pm

    Financialmoron and FT – Check out the National Bank “All in One”. You can have unlimited accounts for $2.50/month each. Each account has a number so you can get separate cheques and link a credit card. This is good when implementing the cashflow dam. You can capitalize the interest. National bank does want the interest payment but you can direct it all to the mortgage account and not to the investment line.

  62. Man From Atlantis on July 24, 2007 at 2:00 pm

    FinancialMoron and FT – Check out the National Bank “AIO”. You can have unlimited accounts at $2.50/month each. Every account has its own number so you can have cheques for each account and a credit card linked to the account – this is idea for cash flow damming. You can capitalize the interest in accounts. National Bank does want an interest payment each month (unlike Manu) however you can pay the total of all the interest charged in all accounts to just one account – the Mortgage line.

  63. Brian Poncelet, CFP on July 24, 2007 at 8:46 pm

    Man from Atlanis,

    I don’t understand “you can capitalize the interest in account” then you talk about “National Bank does want an interest payment” Uh?

    Please read pages 72 & 73 of Fraser Smith’s Book
    Is your mortgage tax deductible? Interest capitalization is an account that holds/has a(line of credit) for upcoming interest payments. For example if the HELOC has $1,000 available, invest say $950. The next month the interest owing on the $950 is pulled from the orginal $1,000, automatically. This is repeated every month!

    The $2.50 per month for the chequing account is good, but how about free chequing? Plus no messing around with accounts…sorry FT this bank will be on my web site in Oct with contact information. Seminars will also start in Oct.



  64. Man from Atlantis on July 25, 2007 at 11:01 am

    Brian – National Bank wants the interest payment for all accounts, however, it can all be paid into one account. So if you owe $100 to the Mortgage line and $100 to the Investment line you can pay the full $200 into the Mortgage line. The investment line will be charged the $100 – you are capitalizing the interest.

    Ok, I had to come up with the extra $100 which went to pay down the Mortgage rather than the interest on the investment line. If the Mortgage line is set up as a line of credit (As the Manulife would be) just withdraw the $100 and put it back in your pocket. If your paycheque is going into the Mortgage line it would be simple.

    Yes, free chequing, credit card is linked free, Currently they pay legel and apprasial (like most banks if you ask). There is no messing around with accounts – just set up SWPs (for free)

    I wouldn’t discount them based just on my description. Let me know your concerns, maybe others can comment on the National Bank “AIO”

    Sorry Brian, I just read your comment again and see that you will be promoting the National Bank on your web site?

  65. Brian Poncelet, CFP on July 25, 2007 at 12:29 pm


    Promoting National bank? I looked at your web site and I don’t see you talking about tax-deductible mortgages. Lets just stick to the facts ok?

    Anyway, my question is with your way, on the second month, third month etc. where is the interest payments coming from, for the investment line? I am not trying to put you guys on the spot, but I think with my way there is less hassle. (Please read my second paragraph and comment #63)



    Ps. I am going on holidays for three weeks starting tommorow and will get back to you.

  66. Man From Atlantis on July 30, 2007 at 10:58 am

    Hi Brian:

    I read your paragraph comment #63 and if I understand what you are saying, you have a separate line set up to make interest payments.

    I am suggesting with the National bank you don’t make the interest payments, just let them accumulate. I may have caused confusion when I said the National bank wants an interest payment. It does but you can pay it into any account. So you have the two accounts one for the mortgage and one for the investment. Make the total interest payment into the mortgage account. So if you owe $100 interest to each account pay $200 to the mortgage account, $100 will cover interest and the other $100 is a principal payment, and the investment line went up by $100 (to cover the interest). If you use the National bank like Manulife and have your pay cheques go in, then you will not have to worry about having the money to make the interest payment.

  67. Artist3d on August 2, 2007 at 10:01 pm

    Well as an artist with no fixed income coming in weekly or monthly and a wife who works a regular job, the M1 account is awesome! I pay when I can and since I know on a yearly basis that I am good for X amount I have no worries about having to make a mortgage payment on time or anything. Plus, I find that no matter how you slice a so called better fixed interest rate with the banks – ie, you pay them $60,000 over 5 years and they keep $45,000!! that just looks likes 75% interest to me. I think you could get better money from a loan shark. Anyway we are very happy with the M1 account and when we look at the CIBC amortization table for one of their standard mortgages I see our balance is already after 6 months where we would be sometime in June 2010… so near as I can see we have already saved $35,000 in interest charges that we would have been dinged by then. The other plus is that as we pay into the account, the payment per month goes down proportionately so it is a win win situation. Interest rates can rise all they want and never reach the 75% your normal bank takes in the first 5 years! The other plus is since all your money is deposited into a “debt” account, you become far more realistic about what you actually have to spend, conversely no problem hiring a gardener with the interest savings or when you need to replace something like a hot water heater or plasma screen ;-) – basically it is a stress-free way to deal with debt. Really like it.

  68. David on August 3, 2007 at 3:33 am

    Yours is one of the few situations where an account such as M1 may have value. However, for those earning a regular income, and who have wisely chosen an amortization period, the savings available from a mortgage with a lower than prime interest rate can be substantial.


  69. Artist3d on August 3, 2007 at 3:28 pm


    Thank you but I have to respectfully disagree, I think in any loan/payment plan you always have to step back from what appears like a short term deal in lower interest and just ask your financial advisor the simple question. “Can you give me a print-out of the first 5 – 10 years payments and interest-ACTUALLY-taken and show me how the pie has been divided?” When I did this and saw the roughly 70% – 30% interest over principle split in the bank’s favour I really could not fathom what warped logic allowed them to claim they were “locking me in at a friendly 5.6%”?.

    The M1 account works beautifully to leapfrog us ahead of that high interest 70% curve ball and it works because all your income comes-to-bear on.the.principle. AND therefore your monthly payments (interest charges) literally come down proportionately – that does not happen no matter how much money you throw at a traditional mortgage! In five years if you do the math you end up paying back the principle on a regular mortgage so little, maybe, if you are lucky 10 or 11%!

    Look, I am just an artist with a working spouse, making half of what most people do and we are already paying off this debt, after only six months to where it would be in May of 2010 by which time we would have literally given over $30,000 in interest under a traditional ‘locked in 5.6% mortgage’. That is very real money saved in my book.

    Our strategy is simple really, my spouse’s regular income goes to all our regular expenses, food, hydro, phone etc. and my income goes to the Principle on the mortgage as I get paid for work done, and I don’t think you have to be an artist to use that strategy. There are other perfectly legal imaginative things you can do with an M1 account too in terms of migrating some of that mortgage debt into an interest tax deductable business expense sub-account. The bottom line is you have the control as well as access to a good percentage of the equity in your home in real cash terms and I personally think it is a HUGE bonus, to never have to go hat-in-hand to a bank to re-negotiate a mortgage, or for a loan of any kind, ever!.

    People should just realize that a traditional mortgage is precisely like the credit card statement you get, the amount ‘recommended to pay” basically covers the interest and hardly a bit of principle.

    Finally, remember too that the high-to-low curve of interest applied in a typical ‘amortization’ (from the Latin meaning – “to deaden” – hehe our enthusiam for home ownership?) is based on the simple fact that statistically, people re-sell their homes within 5 or 10 years, allowing the game to start all over again with a new client. The banks know this underlying and quietly spoken truth and that is why it is structured the way it is. I don’t think it is any co-incidence that roughly, at the 10 year mark is when you see the banks willing to go 50%/50% and allow HALF your “still-high-payment per month” to go to the principle.

    The bottom line is to ask the simple question of whoever is handling your mortgage; show me the “five year pie” ;-) trust me, 5.6% these days is not a DEAL, not when the pie shows 5.6%=70% for them in just the first five years, then go down to your local loan shark and see what they are loaning money for and then maybe go and see a ManulifeOne rep.

    Interesting that the original Manufacturer’s Life was started by Sir John A McDonald in I think 1897? It certainly, nice to see one of Canada’s oldest financial institutions leap into virtual banking with such a genuinely no-shinanigans solution for people. It really is different, people should at least consider it, it is perfect for a two income family.

  70. FrugalTrader on August 3, 2007 at 3:52 pm

    Arist3d, great comment, thanks for taking the time to express your opinion.

    Although the M1 mortgage is flexible and suitable mortgage for entrepreneurs like you, it’s not true that you’ll pay less in interest with M1 than a conventional mortgage. Even if you use their own calculator, it will show the total amortization schedule to be longer with M1 than a conventional mortgage providing that you put $0 for your savings/rrsp, and balance your expenses + mortgage payment to equal your income.

    Try the calculator for yourself:

  71. CF on August 3, 2007 at 4:00 pm


    You need to stop comparing M1 to a fixed mortgage, and instead compare it to an open mortgage with a variable rate – which you can get from pretty much any bank. If you do that, and you apply additional income to the balance (manually – M1 does this for you automatically), the lower rate you can negotiate from any bank (since you can’t negotiate a lower rate from M1) means you’ll have your mortgage paid off faster than you would with M1 every single time.

    Right now you are doing an apples to oranges comparison.



  72. Artist3d on August 3, 2007 at 8:15 pm

    True I am a total financial novice and as such have a rather admittedly naive perspective (hardly have a clue what a lot of you are talking about), typically I only look at the bottom line. But I thought this was a forum specifically about sharing ManulifeOne experiences not apples or oranges.

    Believe me I am not suggesting there may not be better options out there, I am just saying as a new home owner that they certainly were NOT made self-evident by our ‘pretty much any bank’ manager at a critical time in our lives.

    I do respect what all of you have said and will gladly look at any real examples or links people would point to that would offer a solution that provides these key element;
    – save us more more on interest charges
    – keeps the flexibility to pay if and when we can
    – gives us immediate access to everything we already have paid up to 75% of our equity.

    If anyone is interested in more of my perhaps ‘naive perspective’, I have done all I can to add to this discussion and have elaborated in further details our personal progress report on this webpage to better explain how we have come to our positive conclusion about ManulifeOne.

    Fact is the best option is paying full up in Cash 100% 0 interest! :-) Cheers

  73. CF on August 3, 2007 at 8:26 pm

    Ultimately the most important thing is that you are happy with your mortgage. And it certainly sounds like you are, so there is no need to defend yourself here.

    I’m a former M1 customer, and I thought it was great as well, until I started reading blogs like this one and educated myself a little better on the topic, and realized that I was paying about $200 more per month in interest charges with M1 than what I’m paying now. But, I also have a regular job with a regular payday, so my scenario is different from yours.

  74. David on August 5, 2007 at 1:26 pm


    Have you asked your Financial Planner to show you the first 5 – 10 years of a regular mortgage which has an additional $1375 per month applied against the principal? You would then be comparing your current experience against a regular mortgage. There is no mystery to M1. The application of your current artist’s income is actually a HUGE payment increase, and is about equal to having a mortgage with a seven year amortization, instead of the 25 year that you are comparing to.

    If you go to the calculators at, you can look at numbers for yourself:

    AS I said in my earlier post, the Manulife One product may have greater value to an individual with your earning patterns, as it allows ease of managing your money. However, if you look at the two products using the same cash inputs, you will obtain a more accurate comparison.


  75. Artist3d on August 5, 2007 at 8:54 pm

    Well that is the beautifull thing, it is “about equal to having a mortgage with a seven year amortization” without even trying and none of the regular payment committements, total re-access to use all the cash I put into it and nobody to ask about how we manage it. It is the painlessness and transparency of it — even less stressful than when we were renting and needed to have the cash on hand on the 1st of the month. I love it :-)

  76. Novice on August 11, 2007 at 2:55 pm

    I would like to start off by saying that this website has been extremely helpful as I have begun to look into obtaining a mortgage and I would like to thank everyone for posting, it has been very educational and a big eye opener for me.

    I have been looking at obtaining a M1 mortgage, but after reading all the posts here, have begun to rethink this. From what I understand (and forgive me, this isn’t a whole lot), many people here would recommend obtaining a traditional variable rate mortgage (with substantial interest rate advantage over the M1) and simply pay additional funds into it, thereby mimicking the M1 and reducing the amortization of the mortgage (saving money over the long haul).

    It seems to me that if you were to divert all funds remaining at the end of the month to this purpose (thereby reducing the mortgage more quickly), it would be difficult to maintain an emergency reserve for random monetary needs (car problems, emergencies, etc…). My understanding is that it would also be prudent to obtain HELOC to cover such contigencies (also useable for the SM). I hope that I have at least a basic grasp of this, if not, please correct me.

    My question lies here… In order to obtain that HELOC, you would need at least 20% equity in your home, correct? What happens if you only have 10-15% equity in your home? You cannot obtain a HELOC to cover extra expenses (at least until you have increased your equity over time) and this makes maximizing your mortgage payments difficult as you would like to also maintain at least some money in a reserve account for emergencies (you’re not putting all your extra cash towards that mortgage). So now you have a lump of cash sitting in some money market/high interest savings account and it is not working for you towards your mortgage.

    Now, if I had say 10% equity in my home with a M1 mortgage (allowable with a paid premium), as I see it, I’m still throwing all my money at the mortgage and I don’t have to maintain an emergency fund as I can take out what I need when I need it from the M1 (not past the 90% mark). This way my “emergency fund” is working for me daily at a 6% non-taxable rate to pay down the mortgage whereas with the traditional mortgage, i’ll get 4% taxable in the account as it sits there doing nothing.

    Did all that make sense? I hope so.
    I figure that in this fashion, I could pay down my mortgage until reaching that magic 20% equity number and then switch it over to a conventional variable rate mortgage with another lender, thereby saving money in the long term as explained in many of the earlier posts on this blog.

    I look forward to any comments/critiques of what I have written and appreciate any advice given.

  77. David on August 11, 2007 at 6:41 pm

    You could use a LOC for your emergency fund, as it does not require the 20% equity. Although the rate is not as favourable as a HELOC, it would only be for emergencies, and quickly repaid. Annual savings on $100,000 at prime – 0.9% is about $900, so, your additional interest cost on the LOC could equal $900 per $100,000 of borrowing before the M1 becomes equally attractive.


  78. Novice on August 11, 2007 at 7:48 pm

    Thanks David, I appreciate your advice. It definitely sounds doable and makes sense as an alternative. How likely would a bank be in offering a LOC to someone with low equity in their house? Would this be a huge issue?

    One last question for the group here…

    I have been investigating this issue further and have come across another alternative to the M1 that appears quite attractive. The Scotia Flex Value Mortgage (Scotia Total Equity Plan) seems to have the best of both worlds. You can throw as much money on your mortgage as you want whenever you want and they offer a sub-prime rate to boot. Not sure if you can withdraw the addtional funds deposited if an emergency arises but I’ll look into that (besides as David indicated, can get a LOC on the side for emergencies). Additionally, the interest is compounded semi-anually instead of monthly a-la-M1.

    Any thoughts?

  79. FrugalTrader on August 11, 2007 at 10:06 pm

    Novice, most re-advancable mortgages will do what the m1 does or the scotia step plan. Here is an article comparing most readvancable mortgages available to the market:

    Let me know if you have any questions.

  80. DAvid on August 12, 2007 at 12:45 am

    As long as you have a good credit rating, and are not carrying a great variety of debt, a LOC should be readily available. Your interest rate may vary based on the risk the banker perceives.

    I believe Scotia Bank’s product requires a request to the bank to readvance the mortgage funds; likely not a big deal for your plans, however, none (except M1) will readvance until you hit that 20% point.

    You will of course have the insurance premium to pay if you go with a higher ratio mortgage. If you have the financial will, you might wish to obtain an 80% mortgage, and pay the difference with a second loan (LOC?) that you repay quickly, avoiding the insurance issue altogether. Availability will depend on your relationship with your banker.


  81. Artist3d on August 12, 2007 at 3:01 pm

    To Novice,
    There are really no “should be able to”, “could be able to” attributes to an M1 Mortgage. It is simply a line of credit up to 70% of the value of your home that you pay back if and when you have the cash. They ding you the prime rate monthly which will never amount to the 70% interest charge of a traditional first 5 year mortgage. You have total access to all cash paid into it without penalty fees or having to ask anyone anything about what you want the money for. It is totally stressfree as there are no ‘due dates’ and you can set up sub accounts that allow you to eventually migrate your mortgage into a business expense account as you need money for your business which eventually means all the interest on the ‘debt’ eventually will become a write off. The beauty is you do it all yourself.
    Love the freedom and independence of an M1 account!

    But you know that already.

  82. Novice on August 12, 2007 at 4:46 pm

    Thanks all. The information is much appreciated.

    Frugal Trader, thanks for the link, the page comparing the various mortgage lenders was very helpful. I realize that there are different mortgage products that may be appropriate to different people in different situations, but what would you recommend to someone starting from scratch (buying first house) with no debt to speak of? I think I have ruled out the M1, and am leaning towards a Scotia Bank Flex Mortgage. I really want to eliminate the mortgage as fast as possible and project to have extra money at the end of the month to throw at it once in awhile (hence needing the prepayment option). I don’t however, want to go with a shorter amortization and higher required payment
    each month.

    Artist3d, I can appreciate your enthusiasm for the M1, I was just about sold the first time I came across their site. It seems well suited to your situation. I suppose that it does offer freedom, but this comes at a price. You pay a premium (higher interest rate) for the privilege of the convenience you get. I’m not great with numbers, but if you were to calculate your interest payment for the first year with M1 on say, a $200,000 mortgage (@ 6.25%), you’re paying $12,500 in interest. At 5.5% (rate you could get for variable 5 yr.) you’d pay $11,000. The difference that first year would be $1,500. Now, it seems to me you’d have to be holding $24,000 in your account (paycheques, income, etc…) at all times throughout the year to generate the difference between the interest rates ($1,500/0.0625). This does not take into account the $14 per month fee as well. Note that this also does not take into account the month to month differences in interest as the debt increases/decreases. I’m not that fancy with the numbers :)

    If my math here is wrong please correct me.

  83. DAvid on August 12, 2007 at 10:56 pm

    You’ve hit the nail on the head, and discovered why CF (and others on this site) made the move that he did.

    Most mortgages offer an option to ‘double-up’ your payments, and some allow further annual lump sum payments, so, unless you expect to have more than your monthly payment to add as an additional payment, any of those mortgages would meet your needs. Even if you have a bit more than your monthly payment every month, you could save it until you are ready to apply a lump sum. If you have the opportunity to make extra payments early in your mortgage, you will see the greatest reduction in length of mortgage. The $1500 that you don’t pay in interest in your scenario, is actually more money, as you don’t have to earn more to have $1500 left after you pay taxes on it! In my situation, I would have to earn an extra $3000 to take home $1500, so the interest savings are important to me.

    By way of example, three and a half years ago we took out a 25 year mortgage; today, there is 12 years left on it. We have made additional payments as we had the extra cash, and when I received a raise, we increased the payment amount a bit and now pay more each month.

    Remember, Artist3d is comparing a 25 year mortgage amortization to about a 7 or 8 year amortization using M1 in the fashion he does. With the large sums of irregular income Artist3d receives, a closed mortgage is less useful than an open one. However, few of us have an average of $1375 per month in unexpected or irregular income to apply against a mortgage. And, unlike Artist3d, not all of us have business expenses to deduct from income.


  84. Online Mortgage Broker on August 18, 2007 at 2:41 pm

    Hi All!

    We updated the Smith Manoeuvre Mortgage Comparison to reflect each lender’s maximum amortizations (on their fixed portion) as well as if they allow you to capitalize your LOC interest.

    The page continues to be a work in progress. If anyone finds any discrpancies let us know and we’ll punish our poor underpaid researcher. :)

    Have a good weekend!


  85. Canadian Tire One-and-Only Account on September 6, 2007 at 10:36 am

    […] out. Still, the One-and-Only account is a significant new competitor to the Manulife One account (review by Million Dollar Journey) because there are no monthly […]

  86. Rosheen on January 20, 2008 at 8:27 pm

    I appreciate that most of you are money experts and have no bad credit. In the Real world there are a lot…A LOT of single mothers, young first time home owners, and middle aged not too savey with money people out there that are paying 19% on credit credit cards, I recently met with a single mom paying 11% on a car loan. For people with debt at higher rates and a tight budget moving the higher debt. into a M1 and having one payment decreased the amount they have to pay each month thus increasing their cash flow on a monthly basis. It has reduced the stress of having to borrow from Paul to pay Peter and improved credit ratings and credit scores because the mortgage debt is not reported monthly. This M1 can be a very good product to recommmend in the right situation.

  87. DAvid on January 20, 2008 at 11:31 pm

    Don’t be too sure that ‘most’ of us are money experts. Many of the contributors here are self-taught, and hold no credentials in financial planning. We are sharing our knowledge and experiences.

    The comment you offer was often discussed on Mork’s blog before it’s demise. While the M1 could be used in the fashion you describe, the borrower must also address the root cause of their indebtedness, else they can continue the spiral of debt even further! Can you imagine what could happen to the individual who sees the equity available in their M1 as spending money?

    Even without M1, an individual can consolidate their debts, and use lower rate loans to climb out of debt; others unfortunately, see a zero balance on their credit card as an invitation to spend.

    If you are in one of the categories of indebted individuals you have described above, and are getting a handle on your debt, congratulations and best wishes on meeting your goal of being debt free. If M1 helps you get there, so much the better. Some folks have opted to use an amortized debt consolidation loan, rather than a credit line, with the payments equal to their previous payments. This allows them to use the lower interest rate to advantage, while having the forced savings of servicing the debt fully on a monthly basis.


  88. Artist3d on January 21, 2008 at 7:30 am

    I checked out the Canadian Tire version of the M1 account… but they have no way to set up subaccounts to allocate – for instance, business loan interest write – offs – it is not as flexible, but that ‘no monthly fee’ is attractive if they ever make it more flexible.

  89. SupportingParent on January 27, 2008 at 10:09 pm

    I’d be pleased for advice:

    I am buying a $250,000 condo this week – I have a steady income that can support a mortgage of $350,000 – I have $150,000 in a savings account to support a family member in the future (date not known) – but I need the available cash when requested.

    So, how to best reduce interest costs? I don’t like paying interest.

    If I put $60,000 down and take a variable rate 5-yr open mortgage the payments are about $3300/month. At the end I own the condo.

    But, I am doing this all the time $90,000 ($150,000-60,000) is in a savings account – seems stupid to me. And I am not using all my spare income for the mortgage because I need to recoup the $60,000 down payment in case the full $150,000 is required.

    Is using an LOC or M1 account a better way assuming I can reverse payments and take out $150,000 when (if) needed in a year or so? I’d start borrowing only $100,000 but can I run it back to $150,000 owing easily if I need the cash out?

    Thanks for help.

  90. Ed Rempel on February 3, 2008 at 12:13 am

    Hi Rosheen,

    That is a valid point that M1 would allow you to refinance other debts at better rates. ButI agree with David, that you could do this with a LOC or other loan.

    M1 (or using a credit line as your mortgage) works well for disciplined people that spend less than the make, but works badly for people that are not disciplined enough to reduce their mortgage in addition to the payments regularly or people that spend more than they make.

    For these reasons, we are very selective in who we recommend an M1 or similar mortgage. We want to make sure the client will be better off long term.


  91. DAvid on February 3, 2008 at 12:01 pm

    Supporting Parent,
    There is not enough information in your post to provide a reasoned comment. The stumbling block is how soon might the $150,000 be needed, and will it need to be a lump sum payment? Only if there is enough wiggle-room would I consider the route of using a re-advancable loan product. If you used M1 or other mortgage product, your $250,000 condo would support a $187,500 LOC. If you used the whole savings account, you would have $87,500 free, and could increase that amount by about $3000 per month which means it would be 20 months before you would have the $150,000 available to you again.

    I strongly suggest speaking to a financial planner to see how this situation an best be addressed. Also consider the following points:
    Are you getting the best possible return on your savings? The interest could be used to pay your mortgage.
    Could the savings account be held in such a manner that the tax liability is reduced?


  92. Brian on February 4, 2008 at 6:30 pm

    being on straight commision will the Manulife one account be the right choice for me? I do like the better intrest rate compared to credit card and loans. It would be nice to use during the slow months where my income is not as strong. Any pro’s or con’s out there

  93. DAvid on February 4, 2008 at 9:57 pm

    Yours is one of the situations for which M1 is particularly suited. As long as income exceeds expenditure on an annual basis, it can prevent juggling money across a number of accounts. Just be sure to stick to your budget!


  94. Man From Atlantis on February 4, 2008 at 10:27 pm


    Take a look at the National All in One. It has lower fees than manuilfe. Manulife has a nicer statement and you don’t have to pay the interest if commissions are really slow. Both accounts require a lot of discipline.

  95. Reader Question on Manulife One Account on February 5, 2008 at 11:41 pm

    […] combines all your checking and borrowing accounts into one big pot (you may want to check out Million Dollar Journey’s post on this topic) and the theory is that by applying your income immediately against your outstanding […]

  96. Tim on February 22, 2008 at 11:41 am

    ManulifeOne is a good product, but not as great as Manulife Bank makes it sound. First of all it is not for everyone, for some people a line of credit could keep them in debt forever, and remember banks would prefer that you take your time paying off debt, they simply make more money. Also, what Manulife Bank fails to advise you is that interest compounds monthly which increases the rate of interest you are paying. They used to have this fact on their website but is no longer there. If I remember correctly it adds about .4% to the cost. The claim that you will save interest because income added to the account immediately reduces the debt is a little bit misleading. Yes, it saves you money but if you do the calculations you will find it is very small, in most cases a few cents per day, in any case any savings are usually offset by the monthly fee. Furthermore, they like to use the mortgage calculator on the website to calculate potential savings, when you look at it it is a bit of smoke and mirrors because most people will always underestimate their monthly expenses which really makes the savings impressive. People should use caution when using the mortgage calculator. This product defintely offers convenience but you better be disciplined or else you will be in debt forever.

  97. dayLateDollarShort on February 22, 2008 at 1:37 pm

    Tim, Thanks for the good comment.

    I have a question about the compounding, as the M1 states, if you pay the interest each month, ie: leave more in your account each month than you take out then you don’t really compound.

    Also I have had a M1 for the last few month’s. I am still evaluating if I will stay long term. I plan to take full advantage of the “M1 Challenge” if needed.

    The main reason at the time that I chose M1 was because of the flexibility. The other reason was I felt that it was a good option was that my new mortgage would start out 10k less than it other wise would.

    I am not sorry I chose it(because it is open), but I now realize that this flexibility comes at price.

  98. Tim on February 22, 2008 at 8:42 pm

    To daylatedollar short:

    M1 calculates interest charges on a monthly basis, since it is a line of credit. A traditional mortgage uses semi-annual compounding. The more frequent compounding raises the real interest rate by about .4%. So when Manulife Bank says it is charging you prime at 5.75%, in order to compare this rate to a traditional prime rate mortgage at 5.75% you should add .4% to the M1 rate making it 6.15%. It has nothing to do with what amount of money is going in or out of the account. The bottom line is in order to compare rates you want to be comparing apples with apples. I don’t understand what you mena by starting 10k less. I also have a M1 and like the convenience, but I am moving to the canadian tire account because there is no monthly fee. The only thing it doesn’t have are the subaccounts, but most people don’t use them anyway. What Canadian Tire has that M1 doesn’t is the option of more than one fixed rate account, so in effect they could operate as subaccounts perhaps. Most of the monthly fee M1 charges goes to the financial adviser who referred you to the account. Manulife Bank pays them an annual trailer fee of .10% of your borrowings paid monthly. So, that is where your $14 a month is going. Canadian Tire will not need to compensate advisers.

  99. dayLateDollarShort on February 22, 2008 at 10:53 pm


    My comment about my mortgage being 10k less was compared to a traditional mortgage.

    With my budget I keep about 10k liquid cash. Much of this stays in a high interest savings, but with M1 I dumped in into the big LOC and continued operating my budget as I normally do. So by choosing an ALL-in one account, my new mortgage started out 10k less. That 10k is actually higher because I set aside money for yearly expenses that will peak at about an additonal 8k.

    I still allocate ‘extra’ money the Mortgage each month. In summary I felt that keeping and average of 15k on the loan balance (that I other wise would not have) was an advantage.

    Thanks for the info.

  100. DAvid on February 24, 2008 at 10:23 pm

    You could have accomplished the same as you did with other accounts. The simple step of putting the $10,000 on your mortgage, while having your Credit Line available to use if needed accomplishes the same goal, but potentially at a lower interest cost.


  101. Kelly on March 7, 2008 at 3:28 pm

    “$14 monthly fee. (really don’t like this)” “…with the $14 monthly fee (I’m frugal)”

    I found the two statements above… unwise. The $168/year should not be an issue if you save paying X thousands of dollars interest charges over the life of the mortgage(which is the main benefit of Manulife One).

    If you dont save any money on interest charges you got much bigger problems then worrying about the $168/year!

  102. Kz on March 9, 2008 at 11:55 pm

    Hi Frugal,
    You mentioned “if you have the discipline” and I wonder if you would articulate what this means in real terms. TX…

  103. Artist3d on March 10, 2008 at 2:35 am

    We have had an M1 account for just over a year and I believe ‘discipline’ refers to the open access you have to up to 75% of the value of your home in what is basically a “line of credit” style mortgage. Also if you are using subaccounts to create a line of credit for business expenses you may need to keep pace with allocating monthly interest charges to those individual accounts to keep mortage interest charges appropriately assigned to your mortgage, sub-account etc.

    It takes discipline when you pay off the monthly payment (interest) on your mortgage and realise that the next day you still have access to the money, unlike typical mortgage payments where the bank immediately pockets 70% of your payment (somehow convincing people they are only charging 5.6 % or whatever).

    M1 adds the interest to your balance however it is often as not cancelled out by deposits you’ve made in just the course of using the account in your regular banking routine.

    We really like that all deposits come right off the principle so that each month our “interest-based” mortgage goes down, unlike a 5 year locked mortgage where for whatever reason it seems you lose about 70% of your payments each month and still pay the same amount month after month after month. No sense that you are getting anywhere fast.

    Hope that helps.

    • FrugalTrader on March 10, 2008 at 9:02 am

      Kz, ditto what Artist wrote above. Basically in order for the m1 product to work with any effectiveness at all, the borrower needs to be able to live below their means.

  104. DAvid on March 10, 2008 at 11:42 am

    Here’s a comment from Mork’s Blog of a couple of years ago. I believe it still holds true:
    Jared said: “1) It can be really easy to spend money with this account. Decide when you think you should have your mortgage paid off. Pick something reasonable. If like me, this is your first house, pick 25 or 30 years. Use a spreadsheet to figure out how much you should be paying towards principal, and what the remaining balance should be every month. Make sure you are always ahead of that balance, otherwise you will never pay it off.”

    If you only pay interest on the M1 account, you will be paying Manulife a far higher premium than Artist3d suggests the banks charge — it could even exceed 100% if you spend rather than save.


  105. PDurple on March 16, 2008 at 11:20 am

    I might be wrong here with regards to how the interest is compounded, but if you make your minimum interest payment each month, like the CT One & Only requires, your interest isn’t compounding at all…is it?

    M1 doesn’t require a payment and therefore, if you don’t make it, your required interest payment is added to your balance and compounds each month.

    I think with the CT One & Only, you simply need to make the minimum payment (usually covered with a regular paycheque), but could also be satisfying the minimum payment by withdrawing the interest amount, then re-depositing it….appearing like a payment.

    Of course, you can’t do that forever, but in a pinch it would get you through a tough month or two.

  106. DAvid on March 16, 2008 at 12:11 pm

    From the M1 Site: Interest calculations — The interest is compounded monthly, not semi-annually. However it doesn’t really compound because the interest must be paid off each month. To do an apples-to-apples comparison of effective interest rates, you should add about 0.10% to 0.15% (10 to 15 Basis Points or BPS) to the posted Manulife One rates. For example, 8% compounded semi-annually, not in advance would have an effective rate of 8.16% at year-end, whereas, 8% compounded monthly, not in advance, would have an effective rate of 8.30% – a difference of 0.14% (or 14 BPS).”

    Mannulife will withdraw the value of the interest from your account each month, and seems to expect at least that amount of money to flow through the account. Thus the transaction account would show an interest withdrawal, and an increase in your spending.


  107. julie on March 18, 2008 at 9:17 pm

    First time leaving a comment.
    I am meeting with my financial advisor and a M1 rep tomorrow. I have read all of the comments above and am feeling unsure about moving from a credit union fixed mortgage at 4.7% to the M1 product. I am scheduled to renegotiate my mortgage in May 2009. Maybe I should hang on till then? Any input appreciated as I am new to this world!
    ~ J

  108. Artist3d on March 18, 2008 at 9:40 pm

    As I have said in previous posts… ask your Credit Union for a printout of your next 5 years payments and have a look at how much you will have paid off the Principal? Are they REALLY only taking 4.7%? or are they pocketing closer to 70% as my bank seemed to show in their printout… after 5 years $45,000 for them and about $15,000 off the Principal for me! At least the M1 is an honest prime rate per month charged and your interest payments go down month to month based on less interest on less principal. The math is pretty easy to compare. Others on this forum seem to suggest there are even better ways.. but I like the flexibility of an M1 account, with total access to all the payments previously made and no monthly ‘deadline’ to pay it back, even though our deposits alone seem to more than cover the interest anyway. It is so stress-free I can hardly believe it. (but be careful about how you manage such ‘freedom’ of access).

  109. Brian Poncelet, CFP on March 18, 2008 at 10:16 pm

    Hi Julie,

    As a financial advisor my advice if you want to work with MI is set it up as second. Do not pay a penalty! Your rate of 4.7% is good wait… until 2009.

    The key is to go with what you are comfortable with. There is lots of good posts here and every one has some points. Just do not pay any fees to get out of your mortgage at this point.



  110. DAvid on March 18, 2008 at 11:28 pm

    Welcome to the blog!
    I echo Brian’s comments about staying with your current lender until your mortgage expires. I also suggest you speak with your CU to see if they have a product to match M1 in style, if you are truly interested in a ‘ONE’ account. Many do. Envision has Redfrog; others may have similar products. Then there are the other financial institutions (Canadian Tire, National Bank) and the big banks, all of whom have similar products.

    Finally, it has been stated that Manulife pays $400+ to the referring agent, and a continuing trailer fee, based on your business. Remember this when you are being pressured to move your finances to another institution. Your CU likely returns fees to you based on patronage!

    I wish you well in your decision making.


  111. Forum Gal on March 21, 2008 at 1:42 pm

    I have just discovered this forum and have found some great advice.
    I switched to Manulife One account in November 2007 and very pleased that I did.
    The one issue that seems to come up a lot is that “you need to be disciplined and spend less than you deposit each month”……..I`m confused as to why this is even an issue……my sole purpose of switching to this account is to pay off my mortgage as quickly as possible……..who would open this type of all-in-one account if you were not living within your means!
    This account allowed me to combine my mortgage and some small credit card debts into one manageble account… monthly interest payment is almost $800 less per month that I was paying for my old mortgage and credit card debt alone…..has made my life stress free….never have to juggle or worry about paying my bills. At the same time I see my debt growing smaller and smaller each month. I am disciplined so I am one of those that I feel will reach my goals with Manulife One.
    p.s. My current interest rate is 5.25% not 6.25%…..and hope to see further reductions in the coming months.

  112. Artist3d on March 21, 2008 at 2:59 pm

    You got that right, congratulations… it is a very cool account for independents… and I was just working out some rough figures regarding income tax rules pertaining to mortgage interest and that is looking pretty beneficial as well… especially if you are self-employed.
    For the self-employed the M1 is a particularly useful account for creating a sub-account line of credit for your business expenses.

  113. FrugalTrader on March 21, 2008 at 3:08 pm

    Forum Gal, the 6.25% interest quoted in the post was prime at the time. So yes, the rates are lower now, but a discounted variable rate will ALWAYS be cheaper.

    But I agree with you that only a disciplined saver should consider the m1 account as the “freedom” of spending the big balance could be too much for some.

  114. DAvid on March 21, 2008 at 3:29 pm

    Financial Gal said: “my monthly interest payment is almost $800 less per month that I was paying for my old mortgage and credit card debt alone”

    Yes, but that is an interest-only payment. Your old mortgage (and your credit card payment) included a reduction of the principal in each payment. As Jared stated in the quote above, you need to ensure that you are reducing the principal at a fast enough rate, else you get caught in neverland, and have your mortgage debt for life.

    You actually need to deposit far more than you spend each month, as you need to reduce the principal enough to see the interest savings you expect.


  115. Forum Gal on March 21, 2008 at 3:32 pm

    I certainly don’t pretend to be very financially knowledgable but do know the Manulife One account works great for me. Curious to know what you are referring to ….”regarding income tax fules pertaining to mortgage interest”….again, I am learning as I go…I was not aware that there are any tax saving pertaining to mortgage interest….is this just a tax savings for the self-employed?

  116. Artist3d on March 21, 2008 at 3:40 pm

    PS The M1 account has incredible flexibility for managing your debts and I think it brings home a reality check for a society that breaks the illusion of whether we actually have any money… a lot of us who previously had regular bank accounts were under the illusion we had money ‘saved’, the M1 account clearly reminds us that we live in a negative balance world. For me it has lead to better money (debt) management by default.

    Oddly, I have been more intrigued by paying down my debt than I ever was trying to add to any illusory ‘savings account’.

  117. Forum Gal on March 21, 2008 at 3:41 pm

    I often hear that comment….”you actually need to deposit more than you spend each month”……in a typical month I spend just over 50% of my income so for that reason I feel M1 will work well for me. Isn’t that the whole idea of switching to Manulife One? to reduce debt?
    I have no doubt there are people who switch to M1 with the thought that they will be able to dig into that equity at any time.

  118. DAvid on March 21, 2008 at 3:42 pm

    If you run a home based business, you can claim a portion of the costs of operating your home as a business expense. So, if your hair salon consumes about 15% of your home’s floor area, 15% of your mortgage interest, heat, hydro, etc., is a business expense. Since business expenses may be deducted from income……

    You could charge yourself rent (just as you would a tenant) and accomplish the same goal.


  119. Forum Gal on March 21, 2008 at 3:58 pm

    Like many people, having savings was just not achievable. As a single parent there were few extras, and savings were just something I could never “afford”. I came late to the game, did not buy my home until I was in my late 40’s and I consider it a great achievment. So my goal now is to be either debt free, or as close to it as possible by the time I retire in 8 years…and with discipline I feel I can achieve that. Don’t get me wrong though, even though I am not a spend thrift, I do not live a deprived life. I am finally in a position that I am able to travel and live a financially stress-free life and Manulife One account has made that easier to do. If was just a few years ago that I would never have predicted that I would be in the comfortable position I am in today. I agree with most who say there are alternatives to M1 Acct. and from their comments they are far more knowledgable then I am about these things…….everyone has to find where their “comfort” is.

  120. DAvid on March 21, 2008 at 4:03 pm

    “Isn’t that the whole idea of switching to Manulife One? to reduce debt?”

    Switching to M1 does not reduce debt. While it may make managing your budget easier, it does not in and of itself reduce your debt. I believe many choose it due to the lower payment (interest only), which may actually cause you to extend your payment period.

    You indicated in your first post that you had some small credit card debt, which you put into M1. Usually folks who have savings on their monthly expenditures are not carrying CC debt, as the balance is paid in full each month. If you truly hope to pay your (mortgage) debt more quickly, you will need to ensure that you are indeed leaving as much or more in your M1 account as you were previously with your other bank or CU.

    Best wishes in using the M1 account to reach your goals — just be sure to follow your budget!


  121. dayLateDollarShort on March 21, 2008 at 4:15 pm

    Good discussion,

    I have had an M1 account for three months now, for similar reasons stated above.

    I consulted a mortgage broker who did NOT sell the M1, but told me that it was a good account. He stated that though the interest was higher, he told me to consider the overall effective interest that I would pay over the long term.

    If I had a regular account, I would put extra to my mortgage, but it is my belief, based on my budget, that I can average more with the M1. I guess the big question is how much do I have to keep in the account to make up for the possible discounted rate at another bank.

    I have my reasons for starting with M1, but because it is open and would be $100 dollars to leave, I am prepared to change mortgages if needed.

    It would be great if one of the experts in this forum could give some criteria that I can use to decide how I am doing with the account after say one year.
    To me it would be something like, comparing the total interest and principal paid vs a traditional mortgage.

    Thanks for the discussion.

  122. DAvid on March 21, 2008 at 5:49 pm

    Have a look at the link in post 15 to see some numbers compared. You could also run some numbers of your own at to see the differences.

    However, to answer your question, with a 0.80% rate difference on $100,000 you would need to have some $15,000 in the M1 account to make up the interest rate difference. The 0.8% equals $66.67/mo interest and at 5.25% you would need about $15,000 to earn $66 interest per month. Add the fact that you have to earn more than $66 to pay $66 in interest, and the savings are actually greater.

    Your comparison of the total interest and principal paid, vs a traditional Mortgage is on the button. Just include all your additional payments. will help you with this. Don’t forget the interest rate calculation difference noted in post 107.


  123. Artist3d on March 21, 2008 at 5:59 pm

    I am no expert but here are some personal reference figures after a year with this account. As an artist with a meager income I managed in one year to trim approx. $11,000 off our bottom-line mortgage, while also keeping up with paying off the $8600 in M1 interest, which compares to a typical mortgage where we might have paid off only $3000, been relieved of approx. $8700 in irretrievable interest AND still be paying the same monthly payment at 5.6%.

    A year later with a floating prime rate down from 6.5% to 5.25% we are paying about $165 less interest per month and while it is true we might have also paid off more to a traditional bank mortgage, there is a certain comfort knowing that all of these payments are in a line of credit style equity we still have access to. It is a key feature of the M1 account that just feels right and fairer to homeowners.

  124. dayLateDollarShort on March 21, 2008 at 6:07 pm

    Thanks for the info,

    The other side of the coin for me would be the HELOC portion of the account at a traditional bank. If I was to switch to discounted prime bank, what would I expect for a rate on Heloc side? Would it also be discounted off prime?

    The reason I ask is that we built a new house and will be dealing with more costs over the next few years (deck,fence,yard etc..) where I will need access to a LOC now and then to get these projects underway.

  125. DAvid on March 21, 2008 at 7:29 pm


    Thanks for proving my point. In August, you stated that you had reduced your mortgage by some $13,000 over the previous 8 months, but by year end, your total was $11,000. Thus instead of reducing your principal by about $1395 per month, as you did for the first 8 months of the year, you averaged about $900 per month for the year, and have increased your debt since August. Your total interest payments were effectively the same (within $100) as if you had taken the fixed mortgage, and higher than if you had obtained a prime minus variable rate, so even though you have paid Manulife $8000 more than you would have paid your other bank, you have paid Manulife as much interest as you would have with the fixed rate.

    As has been stated earlier, this account is excellent for folks who have varying income, and hopefully yours will increase during the summer months to allow you to meet your earlier targets.

    I think you have also shown us how easy it is to hope to meet targets, only to find life get in the way, and those plans are confounded.

    Best wishes on meeting your goals!


  126. DAvid on March 21, 2008 at 7:32 pm

    Most HELOCs are at Prime. I believe there are a few financial institutions offering prime minus HELOCS, but they are rare.


  127. Artist3d on March 21, 2008 at 8:24 pm

    Indeed as the year went on and I found that “life got in the way” I did relax my self-employment goals into the M1 account a bit, realizing that famous Alfred E Neuman sage-like advise… “What, me worry?”

    Will keep you updated… this year looks better for us with lower interest accumulating month to month and some interesting flexibility and bonus savings on interest I discovered free for the taking with those sporadic 0% – 1.9% interest credit card transfers ;-) hehe

    Nice having total access to all our equity for lil savings like that.

  128. julie on March 27, 2008 at 3:12 am

    Thank you everyone for all of the helpful information and sharing of experiences posted here. I had my meeting with an M1 rep and I am now clearer on how the M1 works but, I think I am still undecided about whether or not it is a good idea for my situation. I have no savings to sit in the account, I have no credit card debt to switch over for a better rate, and I have a low mortgage rate (and rates for other loans) for the next year… why switch? I don’t like that your interest is calculated once per month, instead of having a bi-monthly or even weekly option and I cannot get used to the idea of making interest only payments. I was interested in the M1 because I would like to pay down my mortgage sooner and have funds available to invest in other property. I have spoken with my lender at my credit union and she is willing to look at offering something comparable. Thanks to the suggestions on this blog, I dared to ask!
    ~ J

  129. DAvid on April 1, 2008 at 12:07 am

    Congrats on delving further into your future financial well-being. While you are chatting with your CU rep., don’t forget to ask how they can help you meet your goal of an earlier mortgage burning party. They should be able to offer a number of suggestions and options.


  130. Getting by on April 1, 2008 at 4:00 am

    Help! I need advice asap. My husband wants to switch to the M1 account, but I’m not convinced. Here’s our particulars:
    Household net income is approx. $5,500/mos. and our expenses are approx. $2,500-3,000/mos.(excluding mortgage).
    Currently we have a $280,000 mortgage with 4.47% interest -and our current 5-yr fixed term ends in Dec/2010. To break this and go to M1 the penalty is 3-mos. interest or approx. $3,100 !!
    We have no other debts but have just bought a $450,000 house (closing is in June/2008) and have only 20% to put down (approx. $90,000) so our new mortgage would be approx. $360,000.
    Our mortgage broker sez we’ll have to ‘blend & extend’ our current interest rate (or just ‘blend’ if we want to keep our current term) with our lender’s new posted rates. (Which I think will take us up to close to the M1’s prime rate anyways?)
    What should we do?? The M1 seems great but I’m not used to this type of account and am worried! I’ve read most of the posts on the need to be good budgeters, etc. but is it actually financially smart to break our current term or should we wait til Dec/2010?
    Any thoughts? as we need to decide by this week! Thanks in advance!

    • FrugalTrader on April 1, 2008 at 7:24 am

      Getting by, I would suggest that you re read the comments in this thread as it will give you some insight into the M1 mortgage. The calculator on their website, IMO, is smoke and mirrors and the only real advantage of the m1 mortgage is if you have variable income. Personally, I would stick with your current rate, but since you are moving, that is a different story. If you were to get a discounted variable rate mortgage and you are disciplined enough to make extra payments (like the m1 mortgage), then you will come out ahead without the m1.

  131. Artist3d on April 1, 2008 at 6:00 am

    Getting by… with a little help from your friends? The best advise appears at the top of this forum but to re-iterate… — just look at the math, go to and run their calculator with your numbers. But also take a hard comparison and calculate the interest you will end up paying from now until Dec, 2010 under your current plan, I’d wager about 33 months at an average $1000/mnth = $33,000… gone. Now calculate how much principle you will have paid off, likely to be not-very-much.

    Under an M1 account, because all your income goes into the account, with every single deposit it comes right off the principle, the day you deposit it. Your budget for expenses do not come out of the account all at once either. So with your monthly balance constantly fluctuating, you are still always subtracting that amount from the principle while your budget is there in your account. So it is easy to see that even that transient money is saving you 5.25% interest on the balance of your mortgage at least part of the month. It is hard to calculate those savings but it ends up being pretty substantial.

    I do not know how your bank calculates that apparently good interest rate of 4.47% but I suspect that they will ‘actually’ somehow manage to pocket almost 60% to 70% of your payments in the first 5 years. Do the math.

    At least with an M1 account it is a relatively honest monthly calculated prime interest rate and all of your money works for you all of the time.

    True, it is a negative balance lifestyle, but it reminds you of your total debt and that, in itself, tends to discipline your spending habits. And yet, it is wonderful knowing all payments and equity you build up is still accessible for emergencies or to fix the place up and sell, so it is surprisingly stress free too, THAT was the biggest surprise! Just thoughts ;-)

  132. Brian Poncelet, CFP on April 1, 2008 at 10:57 am

    Hello Getting by,

    If you can, work with your current mortgage but do not extend the term (if possible). The interest rates are likely to go down but your current rate is good. Why pay a $3,100 fee? Wait til 2010 (two years) if you like M1 then go for it, don’t be rushed. If you had a lot of debt and your interest rate was higher…maybe. This thread covers a lot of good points so read it carefully.



  133. DAvid on April 1, 2008 at 12:20 pm

    Even Manulife does not recommend breaking your current mortgage to adopt their product. Have a look at and read about their Second Position option. This might allow you to test drive their product, and arrive at a final decision in 2010.

    However, as I have stated before, if you have regular income and no other debts, you can pay your mortgage at less cost and more quickly with a regular mortgage product. If you have the discipline to add additional payments to your current mortgage, you will see it fall even faster. The resources to arrive at a decision are contained in this thread. Take the time to fully review them before you make a decision.


  134. Brian on April 1, 2008 at 6:15 pm

    I have posted on here pior to going on the Manual Life one plan.

    Now about 2 monthes into it, it has been the best desicion I have ever made, I was a bit nervous trying this out because I have done “traditional” banking for so long but this was perfect for my needs.

    #1 reason for the desicion
    I was planning on taking out an equity loan for some home renovation plans but every bank I talked to said my intrest would be 9-10% or more. Manual life is about half

    #2 I work on commision and can pay down my mortage more some months than others and sometimes I need to pay less because the income is not the same, This allows me to pay more of my mortgage when the times are good (I have worked it out for the year, and I am paying it off quicker also)
    #3 In the month of March my Water Heater broke and I had to get a new one. Without the manual life one account I would have had to use my credit card and pay 15% intrest but with manual life I use my equity to pay for the Water heater.

    In cunclusion there is always something to fix on a house and I believe that if your putting money “into” the house we shouldn’t have to pay for it out of own pocket. I would much rather use the equity built up to increase the value of the home (it only makes sense *use equity to increase value*). With all the renovations and Water Heater the value of our house doubled.

  135. Artist3d on April 1, 2008 at 8:00 pm

    Brian; those are great features of the M1, never having to go hat-in-hand to a bank for a loan or re-mortgage, you can handle it all yourself.

    For self-employed people it is a particularly useful account for running a subaccount line of credit for your business where the interest is a write-off. This allows you to pay down the mortgage subaccount as a priority, let your business expenses subaccount line of credit grow and over time, mysteriously convert the ‘mortgage’ interest eventually into a ‘business loan interest’, write-off.

    It is all rather interesting the more you look at how it works, with sub-accounts for business, taxes etc. Perfect for a couple where one is regularly employed and the other self-employed with a variable income.

    The fact that some people say there are even better ways out there, is great, but M1 keeps things a little more ‘in-house’ no pun intended, perhaps a little more hands-on with a great sense of independence. Congrats Brian. Enjoy ;-)

  136. Neil MacInnes on April 18, 2008 at 2:13 pm

    I recently heard about this Manulife One system.
    Here is a brief overview of my predicament.
    254,000 Morgage, 29 years left.
    20,000 in auto loans
    I work 28 days in, 28 out
    Works out to 10,200 per month
    3,500 per month in expenses.
    I never make extra payments on
    anything.Very little saved, but would like to
    change that.I have tons of credit, no credit
    card debt.Just tired of living month to month
    would you recommend this system for me?
    Thanks Neil.

  137. dayLateDollarShort on April 18, 2008 at 2:24 pm

    I am an M1 client as well. The issue that keeps comming up is that other lenders will discount the variable prime.

    It seems that this other ‘all in one account’ answers those issues.

    I plan to look at this further, and would love to hear if anyone else has.

  138. FrugalTrader on April 18, 2008 at 2:39 pm

    Neil, if you make over $10k/month with only $3k in expenses with no savings, the m1 mortgage is not going to help you. The m1 mortgage might have a “little” benefit if you save a lot / month. Otherwise, a discounted variable rate mortgage will save you more in the long run (imo).

  139. Neil MacInnes on April 18, 2008 at 5:17 pm

    Thanks FrugalTrader
    I just started to make this kind of money recently Over the last 6
    months. In that time i have around 20k saved so far
    so I guess i am starting to save a little bit.

    • FrugalTrader on April 18, 2008 at 6:24 pm

      Hey Neil, that changes everything! Seems that you have your savings on track, congrats! Like DAvid suggestions, I would put the money onto that car loan then look at putting some money into an RRSP as you are in a higher tax bracket. As mentioned, you have a huge advantage with your income/expense ratio, use it wisely.

  140. DAvid on April 18, 2008 at 5:33 pm

    $10,500 income less $3500 spending and $2000 in loan payments, leaves an enviable amount of discretionary income. I believe you’ve admitted the first step you need take — addressing your savings. You might wish to delve into some of the “getting out of debt” sites to focus your activities on changing your spending habits to your greater satisfaction.

    Your earnings also place you in a high tax bracket, so you should be assessing the means to reduce your taxation. It might be worth while spending some time with a financial planner to determine how best to meet that goal as well.

    There is no panacea. The financial independence you are looking forward to will take effort.


  141. DAvid on April 18, 2008 at 5:50 pm

    Your second comment changes the perspective of things. I repeat my comment about seeing a financial advisor, however, you might wish to use the income you have saved to reduce the car loan(s), as they are likely the higher interest rate debt.

    You also appear to be one who could make use of the Smith Manoeuvre if you really wish to address investment and taxation issues.


  142. Neil MacInnes on April 18, 2008 at 9:54 pm

    Thank-you guys.
    I work overseas so I only get taxed between 12 and 14 percent.
    Thats why I seem to have a lot of extra money kicking
    about. The guy I buy my life insurance from recommended
    this manulife system and just wanted to get some feedback
    on weather this would be right for me.
    I will see a advisor next time I am back in the Country

    • FrugalTrader on April 18, 2008 at 10:05 pm

      The life insurance guy was pushing the m1 mortgage to me also. It has been calculated here many times that the m1 mortgage is more expensive than a discounted variable rate mortgage. The m1 mortgage can work well for those with variable incomes though (self employed) due to its flexibility in payment.

  143. Ed Rempel on April 19, 2008 at 12:51 am

    By way of full disclosure, M1 is generally the only mortgage that pays a commission to insurance guys and financial advisors. That may explain the recommendations several of you have from insurance guys. It could also be that insurance guys tend to be very influenced by marketing campaigns.

    Manulife has an effective marketing campaign about all the money that would be saved. It is based on all the money most people have sitting in chequing and savings accounts making little interest that is fully taxable – while they could instead pay it onto their mortgage and make their mortgage rate after tax. This even beats high interest savings accounts like ING. Getting 3.3% interest that is fully taxable pales in comparison to getting about 5% after tax by putting the money onto your mortgage instead of into a savings account.

    The issue with M1, however, is that their interest rates are much higher than comparable interest rates with other mortgages. Most Canadians don’t have much in chequing and savings accounts, so doing the math on how much can be saved usually is far lower than the interest lost from a higher interest rate on the main mortgage.

    M1 is also more complicated and requires more manual tracking to do the Smith Manoeuvre.

    The best bet is usually to get a variable or 1-year mortgage at the best rate. If you usually have quite a bit in bank accounts or a very uneven income, just get a separate secured credit line and transfer some of your mortgage balance onto it, so you can mimic the M1.


  144. ruth on April 26, 2008 at 12:14 pm

    Anyone heard of the Investors Group All-in-one product….and if so how does it compare with manulife 1….

    still researching,


  145. Man From Atlantis on April 26, 2008 at 6:03 pm

    Hi Ruth

    The IG AIO is really the AIO product offered by the National Bank. It has lower fees than the Manulife One and you can get a separate account # for each account. Just last month they made a change so you can now have a fixed term in the AIO. One advantage Manulife One has is that you do not have to make any interest payments and they will accumulate the interest – up to your max.. National bank requires you to make the interest payments but you can direct them all to one account. If you have no need to accumulate interest i.e. reverse mortgage, then check out the AIO at the National Bank it is a good product. Useful for “speed equity” and/or “Smith Man” and Ed’s programs.

  146. Ed Rempel on April 26, 2008 at 6:29 pm

    Hi Ruth,

    IG All-in-One is National Bank and has had a problem that makes it basically useless for the SM. There is a minimum amount of principal that you need to pay down on your mortgage before they will increase the credit line. That limit is either $5,000 or $10,000. This would mean you could only readvance the principal after a year or 2 of payments, not every payment.

    There is talk that they are about to change this and they apparently just did make some change. They have been promising changes for several years though. We had not heard yet what Atlantis mentioned that they now allow fixed terms in subaccounts. To our knowledge, the high minimum before allowing the credit line limit to increase is still there.


  147. Mortgage Broker on May 7, 2008 at 2:13 am

    Hi Ed,

    Hope all’s been well. Just a quick update on the National Bank All-in-one. They now have no minimum readvance amount and allow fixed or variable locked-in portions (at a discount from prime). Unfortunately you no longer get the “interest offsetting” feature on amounts you lock in.

    They now also offer full and immediate readvancing (no 2-3 day wait) and 99 sub acccounts–not that anyone would use them all!


  148. Garnet on May 11, 2008 at 8:45 pm

    One area I have not seen addressed in this excellent discussion is whether this is an alternative to CHIP for retirees barely getting by on their pension but with a significant equity in their home. The “barely getting by part” is due to accumulated debts (very small mortgage, large credit card and existing lines of credit balances). Reducing the monthly debt payments would at least allow us to make ends meet on a month to month basis and stop a further erosion of our RRSP. Reduction of the debt principal is a worthy but not always attainable goal for seniors, who want to stay in their own home and not sell it even if it would make them debt free. Appreciate your thoughts on this.

  149. Man From Atlantis on May 12, 2008 at 9:37 am

    Garnet, Yes you can use the Manulife One as an alternative to CHIP but if you are not good with your money and borrow easily it could blow up on you. You could set up a line of credit with Manulife and pay off your other lines of credit and debts. With Manulife you don’t have to make interest payments on your line of credit they just accumulate up to your limit. Depending on your age you may not want to use more than 40% of the equity in your home to do this. The interest accumulation will grow beyond 40% of the value of your home. As your home appreaciates you may be able to increase your line of credit. If you have used less than 40% of your home equity to pay off debts then you may be able to draw some as regular tax free income and save your RRSP accounts. This may help you get some government benefits or credits? I would suggest you don’t do this one on your own.

  150. Garnet on May 14, 2008 at 3:48 am

    Thanks for the advice Atlantis. We were looking at 50% or less in any case, but will rethink our plans keeping your input in mind. Manulife has another marketing video in the works for their website and from the thumbnail it appears it will be aimed at seniors. Will have to decide whether to wait for the movie or just read the book :o)

  151. Turtle on May 15, 2008 at 10:10 am

    Self-employed with somewhat of a fluctuating income and having a difficult time deciding between M1, National Bank’s All in One and BMO’s Readiline for our debt consolidation.

    Do any of these LOCs calculate daily and pay monthly? Is this worth it with or numbers (see below)?

    We’ve used the online M1 calculator but find it difficult to believe we would save that much and it does not allow you to compare against a mortgage where you make monthly principal payments.

    We can get a readvancable mortage from BMO (our current lender), open variable at prime -0.6 and can lock in at any time with no fees. Unfortunately BMO still wants us to pay the $2500 penalty since our mortgage renews 2010.

    With BMO, considering the lower interest rate and if we pay bi-weekly plus make additional regular principal prepayments will we not be further ahead than with M1 or All in One?

    For M1 and All in One figures we have been using a monthly living expense of $3500, monthly income $7916.

    For BMO we have been using $340 000 mortgage, 25 yr amortization, $908 bi-weekly plus $200 monthly principal payments.

    Is anyone confidently able to provide some accurate figures to compare so that we can have some peace of mind?

    Also, has anyone any comments about National Bank’s customer service and knowledge about their All-In-One? The product seems good, but it also seems like every rep. tells you something different.


  152. Brian Poncelet, CFP on May 15, 2008 at 10:48 am

    Hello Turtle,

    The first question to ask does it make sense to pay a penalty? Generally, the answer is no. If you need to put the debts under one roof and the interest rates are high it may make sense. The other questions about which product will save you more money can come later.

    It sounds like cash flow may be your problem. Answer the first question, and there may be some ideas to handle the cash flow.



  153. DAvid on May 15, 2008 at 12:24 pm

    The answer to nearly all of your questions is contained in this blog entry. Take the time to review the comments and act on them, and you will find the answers you want.

    With the calculations you provided, you claim to make about $26,000 in annual mortgage payments to BMO, while telling the M1 Calculator you are making $53,000 in debt payments. To accurately compare using the M1 calculator, you would need to enter income of $ 7916 monthly, and living expenses of $5750. This will tell you the true value of the M1 or National Mortgage.


  154. Artist3d on May 15, 2008 at 9:23 pm

    Hey Turtle — come out of yer shell… ;-)

    Peace of Mind is… quickly getting all your income working on all your debt, thus cutting down that principal and actually seeing with your own eyes those interest charges go down from month to month under an M1 account.

    Factor in having total re-access to all the funds paid in – up to 75% of your home’s value and it is a pretty stress-free M1 lifestyle.

    We find it especially suited as a couple where one is depositing a regular income and the other is self-employed making bulk payments from time to time.

    I still don’t like the $14/mnth ($168/yr) fees and having to pay for cheques (I still use a Presidents Choice account for free chequing) but we love the freedom from mortgage payment deadlines and the independence it gives us to manage our finances. The cash is always there for emergency items like repairs, a hot water heater… or a plasma screen too ;-)

    Good luck Turtle… I cannot imagine greater flexibility and simplicity for those of us who are not financial whiz kids.

    Just make sure you are putting in more than you are spending and everything takes care of itself, even as the value of your home increases along with your available equity.

  155. Turtle on May 15, 2008 at 10:01 pm

    Two questions:

    – Does anyone have experience/comments about National Bank’s telephone/online support for their all in one?

    – Who has the best all in one – Canadian Tire, Manulife, National Bank or another institution?

  156. Man From Atlantis on May 15, 2008 at 11:41 pm

    I have a National Bank AIO at Prime minus 0.25%. For what I use the accounts for it works really well. My contact at the bank has been very good. I have had to call the help line once or twice and was happy with the results. They could improve the online banking. I like to be able to view transactions over a month or more and I don’t seem to be able to do this on the computer. There statements are ok. Manulife probably has the best statements I have seen.

    Note that Manulife will go on as a second if you want a this type of product and you don’t want to pay a penalty to get out of your first.

  157. DAvid on May 18, 2008 at 11:45 am

    Interesting that the Yorkshire Building Society (Building & Loan, similar to Credit Unions) charges the same rates for their Offset Accounts as the regular mortgages. If Manulife etc. was similarly competitive, they could have a maunstream product!


  158. Cannon_fodder on May 18, 2008 at 10:33 pm

    I have not read other blog or website entries on the Manulife product so I apologize in advance if this is repetitive.

    I have spent several hours creating my 3rd calculator – this is for comparing loans of different types. For example, I have:

    1. Monthly compounding vs. semi annual. This applies to the SM since you will typically have a monthly compounding – the HELOC – and a semi-annual compounding – the mortgage – portion.

    2. Deductible vs. non-deductible. Again, applicable to the SM since the HELOC if used for investing CAN (in certain circumstances) allow you to claim the interest as a deduction from income, whereas the mortgage portion would not be deductible.

    3. Interest only vs. principal paydown. Yep, you guessed it – applicable to the SM since the mortgage will require principal + interest payments while the HELOC will usually allow for interest only payments.

    4. The various scenarios also allow one to see the effect of inflation. I thought it is interesting when discussing the merits of the SM the reaction when ‘replacing’ one large amount of debt (the mortgage) with another large amount of debt (the HELOC). In order to truly get a picture of it, one has to factor in inflation and deductability so as to compare a $250k mortgage today vs. a $250k deductible HELOC 15 years from now.

    I had almost finished this calculator when I saw activity in this thread. With all of this discussion around the Manulife M1 product, and since my mortgage is due for renewal soon, I wanted to see for myself whether or not this is a viable alternative.

    At first glance the very fact that the M1 has a higher interest rate than is generally available implies this is a non-starter. But, until I could build my own calculator to provide exactly the same answers that Manulife’s could, I wouldn’t be able to understand the implicit premises and thus would only be able to deal in theory.

    If the real M1 product works identical to the web calculator, then there are 3 items that surprised me:

    1. The effective interest rate they use, although done monthly, is actually at a lower rate than an equivalent semi-annual rate, nevermind a monthly one. Of course, this is completely irrelevant if you are able to get a variable mortgage at less than prime. But, it does imply that smaller mortgages coupled with larger amounts borrowed under a HELOC arrangement, produce smaller disadvantages between the M1 and other products. As one gets to a $0 mortgage then the real difference would only be due to the monthly fee. This is because there are very few offerings (and please let me know if you find one!) that offer a HELOC at less than prime.

    2. The Manulife web calculator is relatively simple in that it doesn’t deal with the ebb and flow of income and expenses in a realistic fashion. Based on my reverse engineering, I think this is due to the relative insignificance of its impact. You can clearly see this by adjusting your income and expenses but keeping the difference the same – the results are always identical. And, it treats this difference in the most favourable way possible to show off its impact – a very dubious premise.

    3. The factors which have the biggest impact (negative or positive) seem to be marketed less strongly than that which has the least impact. I would argue that for some people this product might instill new, more debt-conscious behaviour. In a way, you might begin to see that every expense is being borrowed at Prime as opposed to coming out of a chequing/savings account that, let’s face it, is probably not keeping pace with inflation (I better spend it now because it won’t be worth as much a year from now!). The consolidation of many chequing/savings accounts with various minimum balances can more than offset the $14/month fees. (In my personal situation, we have 1 joint account and our own separate accounts. Call this the residue of both of us coming from divorces. What it does mean is that we try to have a cushion in each account to avoid various activity fees. The result is a few thousand dollars not being put to best use.) The overwhelming potential impact that the M1 calculator demonstrates is the concept of putting every available dollar to the mortgage. For some people this could be a catalyst to put more energy towards debt reduction as they see the mortgage melting away faster than they ever dreamed and “needs”, after further analysis, become “wants” and less important than paying down that debt.

    The end conclusion for me is that while the M1 may provide some people the vehicle they need to accelerate the improvement of their financial situation, there is nothing significant that can’t be achieved elsewhere at less cost.

  159. Artist3d on May 19, 2008 at 3:28 am

    Most of Cannon Fodder’s points are good observations, yet I am still baffled as to why we keep seeing in this M1 blog the oft repeated statement that somehow “there is nothing significant that can’t be achieved elsewhere at less cost”.

    I’ll keep reading this blog for any plausible alternatives but so far most suggestions seem cloaked in mysterious non sequiturs. Somebody please post a link to absolute “elsewhere” so we can see it all nice and clear, like on the website.

    The M1 seems so straight forward; an open line of credit, chequing account at prime for up to 75% of the value of your home, done.

  160. Fernando on May 19, 2008 at 10:36 am

    Hi Artist3d (and everyone else),

    I’m looking into this as my mortgage term expires soon. From talking to people (including Manulife reps), the “alternative” to M1 is along the lines of:
    – variable readvanceable mortgage at a discount to prime (currently from 0.5% to 0.9% depending on who you deal with)
    – regular chequing account with overdraft protection.
    – manual pre-payments to the mortgage on a regular basis

    I too would like to see something more concrete (I’m working on a spreadsheet to compare) but it is quite clear to me that the straight forwardness of M1 (which is very, very nice, I agree) comes at a cost: 0.5% difference on a $200,000 mortgage is $1000 in interest…

    Let’s keep the discussion going…

  161. Ed Rempel on May 19, 2008 at 11:30 am

    Hi Fernando & Artist3D,

    The main problem with M1 is that they are not competitive on rates. Their lowest rate on a mortgage now is 5.1%. We are getting prime -.85% which is 3.9%. That is a difference of 1.2% on the mortgage principal, which swamps all other considerations.

    There is no variable below prime option and their fixed rates are usually a bit lower than the banks’ posted rates but not competitive with their discounted fixed rates. We are big believers in variable rates, since they are proven to almost always save money, and M1 does not even offer that option.

    M1 is also significantly more complex for the Smith Manoeuvre than bank readvanceable mortgages, since you need to create a subaccount to be the tax deductible one and manually transfer the interest and the amount readvanced to invest each month.

    The fees of $14/month are high and you can easily get quite a bit lower if you shop around.

    M1 is very simple to use, since you do not have to transfer back and forth between your chequing account and savings accounts or unsecured credit lines to balance your cash flow. It can be dangerous for people that are not good with their money, though, since money is always available. If you are a spender, M1 is very dangerous and could lead to you never paying off your mortgage.

    We use the M1 only for clients that have no mortgage and are using their equity for investment. They are not competitive on mortgage rates, but their credit line rates are prime like everyone else. If your only balance is the leverage portion, then you can use the rest like a chequing account with 3% daily interest. It saves all the transfers to savings accounts or from unsecured credit lines. Then if you can get over the $14/month fee because of the simplicity, it makes sense.

    Fernando, are you considering the Smith Manoeuvre? If you are and are looking for a better option, you can contact our free Ed’s Mortgage Referral Service discussed elsewhere on this blog.


  162. Cannon_fodder on May 19, 2008 at 12:15 pm


    Let’s assume that prime is 4.75% and you could only get a mortgage at P-0.5. Then, what we are comparing is a traditional variable rate mortgage vs. M1. Shall we put aside the impact of the SM for this exercise? Shall we also say that there is no cash sitting around to apply to either mortgage – otherwise, we have to start with a mortgage that is less than $200,000 in BOTH cases (i.e. if you are going to do it in the M1 case you certainly can do the same in a traditional mortgage).

    If you amortize over 25 years, then your payments would be $1,079.32 per month. You would have made a total of $123,796 in interest payments

    For the M1, in order to discharge the mortgage on the same date here is one way to do it. Apply $1,142.30 each month (a combination of principal, interest and M1 fees) to the mortgage portion at the beginning of each and every month (not at the end of the month as is done traditionally). In a way, you’ve already started to compare apples to oranges – if you could apply that money at the beginning of the month with the M1 mortgage, why couldn’t you do it with the traditional mortgage? You could, but the M1 calculator does it the way I described which is certainly to its benefit, but not typical of the way mortgage calculators work in general.

    At the end of 25 years, you have paid out $142,690 in interest and $4,200 in M1 fees. (After 1 year, you would have paid down an additional $300 in principal with the traditional mortgage yet it would have cost you $924 less in cash flow – a savings of $1,224.)

    Interestingly, a traditional variable mortgage at the same Prime rate as an M1 would require monthly payments of $1,134.91 resulting in a total of $140,473 to cover interest (which is less than the M1) and would not have incurred the $4,200 in M1 fees. (You can see the results at

    Notice we didn’t make any prepayments with the traditional mortgage to arrive there? If you want automatic prepayments, you only have to increase your periodic payment – something a lot of mortgages offer anywhere from 15% to 25%. Other prepayments, as they happen, typically have a minimum and maximum, e.g. $500 minimum and a cumulative total of anywhere from 15% to 25% of the original mortgage per year. Can the M1 allow you to prepay as little or as often as you would like without really having to do anything? Yes, absolutely – it is the ultimate in flexibility. Of course, you can borrow from it just as easily.

    I would think that the comparison results are not surprising – how can two people who owe the same amount but at different interest rates expect that they can arrive at the same end result at the same time without doing something differently? So, if one argues that with the M1 I can put more money towards the principal (whether that is planned or not) then one has to acknowledge that a traditional mortgage (which typically have generous prepayment options and increasing the periodic payment amount) would also enjoy similar benefits.

    I think the only argument that can be made where the M1 would be superior is allowing a traditional mortgage’s amortization schedule to dictate your payments vs. developing a habit with the M1 where extra payments go to the mortgage portion and stay there. One could counter that the opposite could happen – you end up worse off because you treat the entire thing as a pool of money to be dipped into as easily as a chequing account. I would not be surprised if both patterns of behaviour haven’t already happened to M1 account holders out there.

    Here is a simple scenario that could apply to many of us. Suppose I want to save up for a family vacation, let’s say $4,800. I might put $400 away in a savings account or perhaps, if I’m very disciplined, I just make sure that each month in my chequing account, there is a $400 each month that is off limits. At the end of the year I have my $4,800.

    On the other hand, with the M1, I don’t have to worry about a thing. I have this extra $400 that goes in the account but doesn’t get removed to sit in a savings account collecting 3% interest (if I get a high interest savings account). At the end of the year, I take out the money and we go on our vacation. Now, do I fool myself into thinking that I paid down my M1 mortgage by an extra $4,800 and don’t counter that with the fact that I have now borrowed for my family vacation at Prime? Or, do I look at it that I saved, in after tax dollars, the benefit of having $400 per month applied to a loan at Prime vs. the interest I would have received from that $400/month going into a savings account? I look at it the latter way – that I had a choice to put the money in a savings account and earn interest that, after taxes and inflation, probably is worth less than what I started with but I decided to apply it to my account and save the interest charges on that money.

    With M1 I would save about $124 in interest charges whereas with the savings account I would get about $45 after taxes in a 40% tax bracket. With a mortgage at Prime – 0.5 I would save about $93 in interest charges. Lest someone then point to this as a clear advantage of the M1 over a traditional mortgage, let’s keep in mind that you are paying more in interest for the M1. Using the fact that extra payments applied to both result in additional savings for the M1 is like saying that if I buy this sweater at 50% off which saves me $100 then why not buy 2 so I can save $200?!

  163. DAvid on May 19, 2008 at 1:13 pm

    Nice discussion, and a handy spreadsheet. I wish I had it when I went through the steps to test various options of mortgage. However, I did arrive at the same conclusion as yours clearly shows. I also second your comment suggesting not to have savings accounts while having an outstanding mortgage or LOC. It is advantageous to place extra cash against debts, and re-borrow later, than have funds languishing in a savings account.

    Just before it ceased, Mork’s blog had a tale of a couple whose equity was spent to zero in an attempt to recover gambling losses. Since one spouse engaged in this activity without the knowledge of the other, it caused much consternation and a re-assessment of their relationship. Your comment about a Manulife One account being used appropriately has merit!

    Thanks for sharing.


  164. Artist3d on May 19, 2008 at 6:45 pm

    Ok well for the benefit of those wanting to see a little ‘real life’ example of what can happen with an M1 account…

    I’ll open my weblink again for a short stint so Cannon Fodder and Fernando can have a look. Call me a creative guy for fuzzy logic but unless I am imagining things we are saving thousands of dollars in advance of a typical mortgage option suggested to us at the time we purchased. See

    We certainly find it stress-free letting the account look after itself as a couple of naive first-time home-owners with very average incomes and expenses. We love the security of having re-access to all the funds paid in. Don’t see a downside to this kind of simplicity and user- friendly arrangement. Hope it helps to look at the logic, appreciate the feedback from ‘realists’ winks to DAvid.

  165. Cannon_fodder on May 19, 2008 at 8:55 pm


    If you are comparing a fixed term mortgage of 5.6% vs. what I will assume is a variable prime M1 mortgage then you have been better off choosing the M1.

    However, it may be of interest to you that around the time you entered into your M1 mortgage, people were reporting 5 year term fixed mortgages as low as 4.95% and variables at prime – 1%. (

    Would you agree that if Manulife offered to write your M1 at prime – 1% you would be better off than you are now?

    I personally find it distasteful the way that banks (even though I own shares in them) were (are?) perfectly willing to hide the fact that they are quite prepared to allow long time, good customers to enter into mortgages at the posted rates.

    I don’t know if we have virtual banks like ING to thank for a change in that philosophy. Their posted rates are ‘what you see is what everybody gets’ and that puts pressure on banks to be a bit more forthcoming. So, when you were offered a rate of 5.6% at that time, you really benefitted by not snapping up that ‘deal’.

  166. DAvid on May 19, 2008 at 10:44 pm

    Another confounder in Artist3d’s experience which makes Manulife One work well for him is the irregularity of the income he earns. When they approached the bank, the Loan Arranger likely based the analysis on Mrs. Artist3d’s income, discounting his, as it is both irregular, and unusual. That they can get by with interest only payments as necessary, applying his substantial irregular income as it comes available, has great value for them, but skews his mortgage amortization tables immensely. Had their banker built their mortgage based on $2000 monthly, an amount closer to the payment Artist3d & wife have managed this discussion likely would not be occurring.

    The banks are poor at describing the options and opportunities available to folk. I believe Manulife plays to that gap, and has created a calculator that takes advantage of folks by promising a magical ride to a mortgage-free life. I further believe the M1 calculator does not clearly describe the assumptions it is making, and invites folk to enter financial information that relates to their current financial situation, but does not caution them that it calculates your mortgage based on you assuming no future debts for the life of the mortgage.


  167. Artist3d on May 19, 2008 at 10:56 pm

    Cannon Fodder – re: “Would you agree that if Manulife offered to write your M1 at prime – 1% you would be better off than you are now?” – Sure, as long as it is not fixed I might entertain it. I think it has been demonstrated quite clearly to me that whereas we would have lost $43,000 in interest or about 70% of $60,000 we would have otherwise paid into a 5 year fixed mortgage, that I would rather take my chances with a floating prime and roll with the punches. Fixed rates mean fixed amounts to pay back, at fixed points in time and we’ve acclimatized nicely to a lifestyle without mortgage due dates as such. Free access to the equity solves most inherent feelings of insecurity in life that can arise unexpectedly.

    Not to say I wouldn’t be tempted to lock in some if interest levels drop below 3% hehe still dreaming.

    It is interesting that credit cards seem to be able to handle 1.9%, 2.9% – seems they are always offering incredible low rates, 0% for a year was unbelievable with CITI recently. We factor all that into our planning and find the flexibility of M1 for careful investment opportunities, short term purchase items and freedom from having to sit down and chat with them about our decisions and our money is the real attraction. Even if we were just treading water breaking even, the increasing value of our propertry offsets things positively all on its own.

    I think for some people it takes the guesswork out of budgeting since the negative balance lifestyle reminds you to pay closer attention to all expenditures.

    DAvid.. you are quite right, they do look at my irregular income as they do all self-employed people and wonder whether it was reliable and yet Ms. Artist3d was the clincher, indeed… not a lot of faith in the self-employed out their even though they are quite often doing ok if not better with write-offs and all.

  168. Ed Rempel on May 20, 2008 at 1:23 am

    Hi Artist3d,

    Do you actually find that the negative balance motivates you to spend less? Do yo u actually find that you are paying your mortgage down faster than with a regular mortgage?

    You make it sound like you like the stresss-free life and being able to buy your plasma TV, and you mention that even if you just break even, your house is still growing in value. This makes it sound like you are paying little down on your mortgage and you really like the M1 because it allows you to do that. A normal mortgage would require payments and take away your flexibility, but it is a forced saving in that it forces you to pay your mortgage down. Your house will rise in value the same no matter which mortgage you have.

    You don’t seem concerned that you can get a variable rate .85% lower than M1, which would save you a lot of money. Is the flexibility worth more to you than all the interest savings?

    You can mimic this flexibility with an open variable mortgage plus a credit line, and you could get this with a much lower rate. Why would this not be better for you?


  169. Artist3d on May 20, 2008 at 3:09 am

    Hi Ed,

    See the temporary link back a couple postings for progress details.

    What you ask does appear to be the fundamental tradeoff – less stress and flexibility or a little better rate, scheduled payments and every 5 years re-negotiating ‘terms of entrenchment’ sic (sorry my bad joke)

    IMHO a regimented payback schedule makes home-ownership seem more a financial ordeal than the pleasure it should be.

    As first-time home-owners we had never faced such a large negative balance as owing on a mortgage, so yes a negative balance bank account had a sobering effect on our spending habits all the while paradoxically giving us a sense of security with access to the 75% equity.

    As a couple, my irregular earnings go towards the mortgage in bulk sums while my better half’s go towards day to day expenses and I run a sub-account LOC for my business expenses for tax reasons.

    Mimicing an M1 account with its all-in-one subaccounts feature and flexibility does not appear to be a simple link anyone has been able to post here, the closest seemed the Canadian Tire alternative with no fees – but it is sadly deficient and pretty unsophisticated.

    When we bought our TV we made sure to create a subaccount LOC that we then made sure we religiously paid off as an ‘extra’. We essentially loaned ourselves the money at prime :) and that is the beauty of it, we feel like we are our own banker and client all rolled into one. It is a feeling of financial independence that kind of surprised us as did the progress and savings we appear to be enjoying especially during these lower interest times.

  170. Turtle on May 20, 2008 at 10:15 am

    Ed (and others), how is the Canadian Tire One and Only sadly deficient and pretty unsophisticated? It seems just as good or better than M1.

  171. FrugalTrader on May 20, 2008 at 10:20 am

    Turtle, in terms of fees, the Canadian tire account is better. However, there are lack of sub accounts with the Canadian tire all in one which makes it very difficult to invest with.

  172. DAvid on May 20, 2008 at 11:29 am

    Just for you, here’s my non-manulife tale–

    Four years ago in 2004, we took a mortgage on a home in a new town. We have a 25 year fixed rate (4.99%) mortgage. We have made a few extra payments and increased our monthly payment in step with my COLA pay increases. We now have less than 11 years left to pay on this mortgage, and currently pay only 3/4 of the interest we did at the beginning. In four short years, we have gotten our mortgage to where we would have been in 2018, had we not added some extra payments. We have also passed the point where the principal paid each month exceeds the interest charged.

    I do not have the income Artist3d claims — as a matter of fact, my monthly payment including interest is a bit over $1000. As a wage earner, I do not have the ability to make huge lump sum payments.

    All the equity in the house is available to us in a HELOC. It’s growth is an excellent indicator of the reduction in our mortgage. Because it sits in a separate account, I find myself less likely to spend it, as it takes a specific decision to withdraw money from that account.

    So, by the time our renewal comes due next spring, we will have paid off 15 years of our mortgage, will be paying less than half the interest each month we first paid, and we will save some $48,000 in interest costs over the life of the mortgage. I have an excellent working relationship with my banker(s), who has suggested many ways to reduce mortgage costs over the years.

    All this done at my regular bank.

    As you can see, we have enjoyed the same benefits you describe, but have not paid the higher interest rates. If rates are low enough this fall I may lock in again, else I’ll go variable or short term


  173. Artist3d on May 20, 2008 at 2:30 pm

    Thank you so much for sharing all that, it really helps to understand through your real life example some of your previous comments re: M1

    Unlike you we had never developed a chummy ‘relationship’ with a bank or banker at the time of our purchase so we were immediately intimidated by the 70% 30% split in favour of the bank over 5 years.

    We were novices and had already committed to the purchase price and felt cornered. I seriously was going to bail out in the face of very tight repayment schedules suggested on top of the insulting nature of a this 5.6% fixed mortgage where the bank somehow keeps 70%, that does not fly in the face of any kind of math I understand. And you know that the end game is worst amounting to almost 100% $295,788 paid for borrowing $160,000. (still wondering how 5.6% or any so called low interest rate ever factors into such agreements, to me it is a blatant con job.)

    So I believe your story is rather unque among mortgage arrangements and I have to hand it to you for working the deal so much in your favour. It does demonstrate the reality that it can be done. I suppose it is still the ‘how’ it can be done for home-buyers in general who face what we faced.

    As you can tell from my postings, I calculate the math too and on balance when it is all said and done ManulifeOne is quite a unique solution that can give flexibility to lot of circumstances especially as you say, in similar situations as ours; wager earner/ self-employed couple. M1 works when you don’t want to or can’t be committed to a strict repayment regime.

    We have not calculated our end game, there is no goal-post where we imagine we will ever pay it off as it seems formidable at this early stage but like you DAvid, we do see our equity LOC increasing as we pay it down. May I ask, what interest rate your HELOC is? and do you really have access to 100% of it? in contrast to 75% of the value of the home?

    Thanks again for a solid example, I think in a blog like this people can really analyse the pros and cons better with real life stories like what we have shared.

    One note to Turtle on that Canadian Tire One and Only – I talked at great length to the rep and basically it is just that – One account – that is it, so for couples who like to segregate their individual expenses and LOCs and other choices it does not offer that.

  174. DAvid on May 20, 2008 at 5:46 pm

    Our HELOC is at prime. It and the mortgage combined slightly exceed the purchase price of our home. This is due in large part to when I last re-negotiated our HELOC. Our home has more than doubled in value in the past four years, and I have not renegotiated the HELOC up to the new 80% value allowed, as I do not believe I have the financial capacity to service a loan of that size.

    I further don’t believe my story is that unique. Over 30% of Canadians take advantage of the prepayment options available from their bank. So, while certainly not the majority, it is a considerable number.

    If you think the bank is charging too much, I ask the question: “If YOU loaned ME $50,000, what repayment terms would you consider satisfactory?”

    Still stirrin’ the pot.


  175. Artist3d on May 21, 2008 at 1:35 pm

    Assuming I was a bank I would look at your particulars first, however as a rule I would do like Manulife is doing, loan you $50,000 at prime until you paid it off, an upfront and honest way to do it.

    Those so-called great rates the banks give that actually turn out to be cloaked 70% loans are deceptive. Our bank told us (with a smirk) the reason they front-load the interest is because statistically people sell their home within 10 years and they can start the whole process over again with a new buyer. That’s nice, really nice ;-) – Glad you managed to find a work around too DAvid.

  176. […] updates, you can subscribe to the RSS feed via reader or E-mail.One of my older posts regarding the Manulife One Mortgage is still generating a lot of discussion. Basically it’s a battle between the convenience of […]

  177. Cannon_fodder on May 22, 2008 at 7:20 pm


    There is perhaps a different financial structure that will help demonstrate how you can ‘con’ the bank into paying you a lot of money.

    Let’s say it’s retirement time and you loan them $250,000 @ 4.75% because you put it in one of their high interest savings accounts. But, you also tell them you want them to pay you some money each and every month. They agree and you come up with an amount of $1,406 per month for 25 years.

    Well, let’s take a look at the first few months. They give you $1,406 but you tell them that, because you loaned it to them at 4.75%, the bank owes you $249,557. This means that even though they paid out $1,406 their obligation to you only went down $443!!! It looks like the tables have turned.

    In fact, after 5 years, you have received $84,360 but the bank still owes you a whopping $220,156. That means that for every $3 they reduced their obligation to you, they paid out over $8 – that’s better than a 70-30 ratio.

    So, it really isn’t a con, but just a normal way of handling the loaning of money. It is simple to calculate how to pay a lot less interest, but it may be too hard to live that way for a lot of people – simply pay more money each month. This is something you are finding with the M1 – you are putting a lot more money towards debt reduction which is allowing you to pay less interest each subsequent month.

    If you know what the periodic interest rate (e.g. what the factor is per month) for a 25 year amortization is, then double it and multiply it by the principal. That will become your new mortgage payment. Then from the first payment on you will be paying at least as much in principal as you are in interest. (It is highly dependent on the interest rate, but it would be typically around 40-55% higher than a mortgage payment for a 25 year amortization.)

    We, too, have a traditional, 5 year closed mortgage with a big bank. In less than 5 years, we reduced it from $300k to $120k by taking advantage of prepayments and increasing the regular payments. But those advantages are pretty common and so the fact that we were successful in reducing our principal is a testament to our income/spending ratio rather than anything special about the mortgage.

    And if a bank person said that they structured their mortgages to take advantage of people selling their houses within the first 10 years, well, I guess they really showed how ignorant they are.

  178. Artist3d on May 23, 2008 at 12:09 am

    Interesting reverse engineering, not sure I have seen such a sweetheart deal like that payout strategy you detailed. Seems kind of better than a perpetual motion machine ;-)

    Wishing you all the bests… looks like you are only 3 years or so from owning your home outright! Congrats on your progress these last five years, that is impressive.

    Perhaps ‘con’ was a little strong in my characterization, all’s fair in love and loans :)

  179. Cannon_fodder on May 23, 2008 at 11:06 am


    There is a theory that if you want your retirement funds to outlive you, do not withdraw more than 4% of their value. Now, this is from the US where they have seen, on average, better investment returns than in Canada.

    But, it should be possible to construct a Canadian-specific, but industry-diverse, dividend paying portfolio that comes pretty close to 4% payout without resorting to those that distribute ROC. Just some financials, utilities, energy, minerals and maybe a REIT or two.

    It would be pretty sweet to be able to live solely off the dividends while the portfolio actually rises, untouched, at least as fast as inflation. That’s my dream right now – to build such a retirement portfolio.

  180. KingRay on May 28, 2008 at 12:37 am

    Great discussion…here is something I would like some commentary on…I completely understand the disadvantage of the M1 having a higher interest rate which for the most part more than offsets any of its potential savings versus a discounted variable rate mortgage (i.e. P – 1%).

    As I ponder my upcoming mortgage choice and as much as I am leaning towards the variable rate mortgage (best rate I’ve been approved for is P-1% closed 5 yr), I am actually now re-considering the fixed rate mortgage (i.e. Cdn Tire at 4.99% compounded monthly 5 yr fixed) now.

    If you were to make your comparison of M1 (or Cdn Tire one and only) versus a 4.99% fixed rate 5 yr mortgage, then would it not make sense to go the M1 route? (curious what everyone thinks the value of M1 would be if one removes the discount variable rate argument)


  181. DAvid on May 28, 2008 at 2:08 am

    Once you move to the fixed rate, you are no longer comparing apples. In the instance you describe, the M1 might remain an advantage over the fixed rate mortgage only as long as Prime remains below 5%. Once it crosses that line, the 4.99 remains cheaper.

    The question becomes, why would you choose M1 with a variable rate, but would not choose a P-1 variable rate? If you are concerned about rising interest rates, and want to lock in, then you should not choose M1; If you are prepared to accept the variabliity of M1, then I recommend choosing the lower rate. A loan of $150,000 at a 1% rate difference equals $125 in your pocket each month. M1 is only an advantage if you can get it at the lowest interest rate, OR you have widely varying monthly income (on the order of $10,000 or more).

    BTW, who is offering P-1 in this market?


  182. JFC on May 28, 2008 at 10:14 am

    I’m also interested to know who is providing prime – 1% in this market on a 5 year closed variable.

    The best I’ve come across is prime – 0.70% on a large mortgage.

  183. Cannon_fodder on May 28, 2008 at 1:21 pm


    Try this little spreadsheet I whipped together. You can input a fixed mortgage rate and input up to 5 other mortgage rates at various months of your choosing (basically a guess as to how fast mortgage rates will rise over the next, say, 5 years) and compare which is better.

  184. Cannon_fodder on May 28, 2008 at 2:29 pm


    Sorry but this is the first time I’ve used Google docs. You can’t edit the spreadsheet with the link above. Please use this one:

  185. KingRay on May 29, 2008 at 4:19 pm

    Thanks for the great feedback (David) and spreadsheet (Cannon)…I guess if anyone was to consider M1 then one is playing in the variable rate game so might as well get the discounted variable rate…makes sense!

    p-1% variable closed 5 yr was pre-approved last year (via builder) and not sure it would be offered to me currently via RBC…everything I’ve read tells me RBC compounds variable monthly even though the mortgage rep is telling me semi-annual)…I know that Canadian Tire is even offering p-0.9% so shop around…p-0.7% on a closed 5 year is not competitive based on my research (goto and search mortgage…there is a broker who was offering p-1% I think via National Bank on variable closed…RBC has offered me p-0.75% on OPEN and at this point I’m leaning towards that…but I have 3 months to make a decision).

    My guess before I tinker w Cannon’s spreadsheet is that I will be better off if I just go w the discounted mortgage and if I was to have some surplus funds to pay at anniversary I would be better off doing it that way vs M1…
    Thanks for a great and insightful discussion…I always get the real scoop via these discussions versus talking to any company person…

  186. DAvid on May 29, 2008 at 9:36 pm


    I tinkered with Cannon_fodder’s spreadsheet (Thanks Cannon_fodder!), and confirmed that, based on prime rates over the past 4 years my 4.99% mortgage was the better choice, however, had I had the option of prime -0.75%, a variable rate would have been the better choice. So, unless you can get a REALLY good fixed rate, you likely will do better with the Prime minus mortgage.

    Your mortgage should allow you to add a payment at each payment, so if you have extra cash, you can put it against the mortgage on a regular basis.


  187. Cannon_fodder on May 30, 2008 at 12:32 pm

    I noticed that some one mistakenly erased the formulas where one of the principal calculations were made and Google Spreadsheets doesn’t allow you to protect the cells. I’ve fixed it up again and put a note in there so if anyone has trouble with it please let me know.

    I’m still waiting to hear from my BMO contact what they will offer me on a 3 year open variable Readiline. She ‘thinks’ I’ll get P – 0.75 and waiving of all fees although some people have gotten as high as P – 0.85.

    Someone said the interest is calculated daily on CTFS – that might make sense because they don’t give the same figures as the M1 offering at the same interest rates (notwithstanding the monthly fee).

    DAvid – nothing like 20/20 hindsight to prove you RIGHT! Makes a great start to the weekend…

  188. DAvid on May 31, 2008 at 11:51 am

    Cannon_fodder comments: “DAvid – nothing like 20/20 hindsight to prove you RIGHT! Makes a great start to the weekend…”

    Actually, the interest rate was more luck than planning. Because we had to choose an Insured mortgage, we were stuck with a 5 year term. Interest rates were quite low, and the banker I was dealing with had recently moved from my previous Branch. Next time will be variable with prime minus, as our equity is much greater.


  189. Happy where I am on June 9, 2008 at 11:48 pm

    This is, indeed, a good discussion about Manulife One. Like Paul and Russ, I’m a very happy Manulife One user who is seeing real savings where before I received one annual mortgage statement that highlighted a gross amount of interest paid and very little principle.

    This discussion has been very focused on the mortgage portion of the account. I think of M1 as a lifestyle account. Being mortgage-free as soon as I can is not a priority because my home offers me the lowest financing out there for trips, special events, my wife’s ongoing decor sprees and all the other expenses kids bring. I do love being my own banker. I don’t have to beg for money. I borrow from myself (cheaply). On the financial planning front, Manulife One has helped me top-up RRSPs while paying down principle.

    The biggest concern I have with all these comments is calculations. I’ve run the M1 calculator and seen quite a few prime-minus calculations that say M1 isn’t ideal. The problem with all calculators is that they’re static. Take all your bank statements and paystubs. Lay them out on your desk and take a picture. Now calculate to your hearts content. All calculators are a snapshot in time. Just as fixed and floating rates fluctuate so does your income unless you plan on never getting a raise, a bonus or a tax refund. Somewhere somebody wrote “rate is only half the equation. If you pay down principle you have less debt and therefore you pay less interest.” There’s no calculator involved in that statement. It just makes sense.

    My income goes to one place. I borrow everything at Prime. I never have to ask for another bank loan for as long as I own my home. I’m saving more money than when I banked from one of the Bay Street banks so while I may never be as smart as some of the mathematician’s here, I’m extremely happy with the account.

    The topic “The high cost of Manulife One” is all relative. You can buy a Hyundai that has more standard features than a Beemer or Merc but give anyone the choice and I can bet which one they’d rather have sitting in the driveway. Manulife One may not be a Lamborghini but it’s a big step up from where I came from. Great discussion and I wish everyone the best in finding their own wealth and happiness.

  190. Brad Dillman on June 10, 2008 at 11:50 am

    I’ve been looking at M1, et. al. for a couple of months now, and I’ve decided on a Nation Bank All-In-One. Mostly, because I can switch now and avoid the penalty by sticking with National. I’ll still have to pay about $700 in fees for lawyers and appraisal (they won’t cover those, which surprises my mgtg broker, and me).

    I’m an engineer and somewhat mathematically sophisticated, and while I understand exactly how Artist3d’s comments are not always correct, I tend to agree with him more than others here (except may cannon_fodder). My wife and I are regular earners, no unexpected cash flows.

    I have never believed in paying down a non-readvancible mortgage because I might need that extra payments back to cover an emergency. Since I started with a high ratio mortgage (10%) I thought it would be a while before I’d have an excess equity to worry about. But I now have about $30k in excess of my 20% requirement.

    I haven’t switched yet, but I should be done within a week.

    I have principle of $154k on an existing NBC variable mgtg at p – 0.75%, with 2 years remaining on a 5 yr closed term, approx. 19 years amort. left.

    After I switch, I’ll have the same variable p – 0.75% with the same principle, etc. plus $30k available in the AIO account, but my term will reset to a new 5 year closed term. I’m OK with this, because I get to keep my p-0.75 for 3 more years.

    As I pay down the principle my AIO will grow. So making extra payments is like ‘transferring’ that amount from my p-0.75% mgtg to my p-0.0% HELOC.

    I don’t make enough money to pay off my whole mgtg within a few years, so I don’t see the benefit of a fully open mgtg. The prepayment allowed is 1) up to 10% of original principle/year, and 2) double the monthly payment. I think any excess income I have would (at best) max out those priviliges; so I don’t need any greater.

    The primary benefit I see in M1 and NBC AIO vs. a readvancible HELOC is the convenience of not shuffling money. The primary benefit I see of NBC AIO over M1 is the variable below prime rate. Also, I don’t see much downside to the NBC AIO variable below prime vs. any other alternative – except those that need even greater prepayment privilages.

  191. Artist3d on June 10, 2008 at 10:17 pm

    Happy Where we are 2
    I have to agree that the M1 account does have a “lifestyle” quality to it in that it inverts that age old stress factor normally associated with big purchase due dates and the slow motion avalanche of Interest one ultimately pays under other plans.

    It is a nice feeling knowing our lives are not even as regimented to due dates as paying rent used to be and it is particularly novel to make payments you can access back the next day if need be. Such flexibility as one could only dream of really.

    One other thing it also allowed us to do is bet against the home insurance companies by choosing as big a deductable as they would allow. Afterall, what are the odds of anything happening anyway? Being visual, I always look at the patterns of the past to determine the probable patterns of the future and well, we haven’t had any house fires or break-ins or floods in all the places we have lived soo…. Again, the M1 “lifestyle” promotes conscientious awareness of your circumstances.

    When you realise that insurance companies don’t even insure you unless you have been all ticketyboo inspected and rated an A1 non-risk customer, you may as well take the same chances they do and opt for the maximum deductible — they will just raise your premium if anything happens anyway so under the M1 you can bet against your fate and go for the higher deductable and pay way less house insurance per year. Just another lifestyle bonus along with the privacy of managing your own finances under an M1 account. ;-)

  192. DAvid on June 15, 2008 at 1:40 pm

    Brad said “I have never believed in paying down a non-readvancible mortgage because I might need that extra payments back to cover an emergency.”

    This is the oft repeated refrain of those considering Manulife One. Folks rarely encounter a true financial emergency in their lives, and there have always been opportunities to use the equity one has in one’s home should a situation arise where extra finances are needed. It is fairly straightforward to acquire a LOC, a HELOC, a readvancement of your mortgage or, if absolutely necessary a renegotiation of the mortgage. My belief is the ease of access to credit through a readvancable mortgage has the potential to make every unexpected expense an “emergency”. Replacing your hot water tank is not an emergency — it is routine maintenance. The means by which you budget for this can vary, and a readvancable mortgage allows for ease of managing this budget, however other methods could also be used to achieve this same end. The readvancable mortgage also has value for those with little equity, as the HELOC increases as the mortgage is paid in it’s early years, rather than having to re-apply for increases.

    National’s All in One has the advantage of discounted interest rates and lower fees. Hopefully, Manulife will follow suit with lowered costs, but I doubt it, as they have started a major advertising campaign to attract new business.


  193. Andrew on June 28, 2008 at 4:56 pm

    Was going to roll my mortgage over to a M1 but am looking at Scotia STEP program instead. 5 year open variable at prime minus 75 bps for the mortgage portion with a LOC for the remainder of the equity in the home (if I choose that much) at prime. With the more convenient access to bank machines than the M1 program this seems like a much better option.

  194. Marty on June 30, 2008 at 2:13 pm

    After reading everyone’s comments, I’m more confused than before.

    I currently have a HELOC work 98K and have 70K already added to it. Leaving me with 28K available funds. My mortgage is 210k and now worth 400k.

    What is the better way to go? Should I deposit my pay checks directly to my LOC and transfer to my Mortgage?

    I shouldn’t have read this blog. I was really considering M1 to consolidate my dept and pay it all off with a lower monthly interests rate. Now I’m thinking M1 is not the way and perhaps, Paying off my LOC and then my house.

    Any suggestions?

  195. DAvid on June 30, 2008 at 6:41 pm

    Your note does not really provide sufficient information to make an accurate comment, but I’m guessing the following:
    You have a house assessed at about $400,000 with a mortgage of $210,000. You have not provided information on the interest rate.
    Your HELOC will allow you to borrow $98,000 and you have consumed $70,000 of it. I assume this is at prime.

    If you are prepared to re-negotiate your mortgage, you should look at obtaining the lowest rate. You then need to find the means to accelerate the payment of your loans. This takes work. You can start by paying your new mortgage at the same dollar figure as your old. You can make accelerated payments (eg. biweekly) tied to your pay period. Finally, you could take a hard look at your expenditures, and see if there are ways you could reduce them, and effect a more rapid reduction of your debt.

    Putting your pay cheque into your HELOC will save you a few dollars interest per month. That’s it. Not hundreds, not even tens of dollars, just a few dollars per month. The savings from a lower interest rate on your mortgage IF you continue to work at debt reduction will benefit you far more than running every dollar through a HELOC or other all-in-one account. No matter the method, you need to put more cash against your debt if you really want to reduce it.

    I believe you’ve answered your own question — pay the higher interest rate loan first, and pay it as quickly as possible. This should be your HELOC, as you could have a prime minus mortgage.

    Best wishes on implementing your financial plan.


  196. Geoff on July 4, 2008 at 12:06 am

    A little history lesson for you, Richard Branson, founder of Virgin Airways started this concept many years ago. He approached the banks in England with this concept and was laughed out the door. He brought a mortgage company for approximately 10 million pounds and sold it to the Royal Bank of Scotland some 7 years later in excess of 2 billion pounds. Who’s laughing now. The Heloc and Manulife 1 programs are all decendants of his concept.
    I tried doing what you suggested and it doesn’t work. That $14 fee is a small price to pay when compared to the fees of continuing to maintain your other chequing accounts and you always leave an balance in those accounts for emergencies which is counter productive what your trying to acheive. Your time for trying to manage all the accounts as you suggest is much more than $14/month. One account for all is much more sense. Just remember one thing when doing this program, pay all your expenses on your credit card and payoff your balance in full with your manulife one account every month. This way you are using the banks money interest free for the month to pay your expenses. Remember, the bank will not charge you interest if you pay off your balance every month.
    With a conventional mortgage, you are prevented from paying down your balance earlier which is also counter productive to the concept. Regardless, paying off your mortgage is half the time is a benefit to any client which the convential lending instutitions are unwilling to market in Canada. WE all know that its the bank’s financial interest that is alway put first. Manulife one or even the Canadian Tire mortgage which mirror manulife’s are better options. Please do your due diligence because some HELOC program from the USA being marketed in Canada want you to pay a $3,500 fee.

  197. Glen on July 6, 2008 at 2:44 am

    Are you refering to the United FIrst Financial Money Merge Acount (MMA) in which they want you to pay $3500 for software which tells you when an how much money to pay against your mortgage?
    (I see there’s a Canadian site now) Does anyone know anything more about this? To me this seems like a lot of money for something that is displayed to you with the M1 monthly statements. By that I mean the M1 statements seem to show you your progress on where you are in paying off your debt. Or am I missing something? Maybe this is just a popular product in the US because they don’t have accounts like the M1 or Canadian Tire All-in-One available to them.

  198. DAvid on July 6, 2008 at 12:38 pm
  199. DAvid on July 11, 2008 at 5:44 pm

    You asked if you are missing something about the Canada First Financial product. Yes, but not much!

    The United First Financial product is basically a $3500 budget tool allowing you to input various permutations of savings and expenditures on your budget and see the result of those changes on future mortgage payoff. Based on your inputs, it will also direct you to place all of your unspent income against your mortgage, and withdraw necessary funds from your HELOC. This should sound familiar!

    You can get similar payment information simply by running your options & permutations on any of the available calculators on the ‘net, including the Manulife one, for far less than $3500. There are any number of free spreadsheets to help with budgeting, or you could use a product such as Quicken to manage your finances, for a savings of about $3400.

    There is a 175 page discussion of this on the Fat Wallet discussion board. The end result was you could obtain better results by doing the transactions yourself, and far better results if you took the $3500 you would spend on the software, and put that against your mortgage first! The issue which seemed to frustrate most participants in the discussion was the lack of financial knowledge on the part of the promoters of the UFF MMA product, and their blind faith in the numbers output by the software.

    Hope that helps.


  200. Alex on July 16, 2008 at 11:38 pm

    Interesting thread. We are debt free with two incomes and am looking to borrow about $150K for an addition. Our house is valued at approx $400K. Should we go with a mortgage (our CFP suggested the M1) or LOC? I was not thrilled with the monthly fees for M1 rate but Citizens Bank was looking for $700 in fees to set up a mortgage. Suggestions?

  201. DAvid on July 17, 2008 at 10:27 am

    A lot depends on your planned repayment schedule, and the renovations. You might wish to have a HELOC or builders’ loan to start, then convert it to your final loan product on completion of the project. If you plan on repaying your loan in regular installments, this would allow you to draw the HELOC as needed during the building phase, and have the lowest interest rate mortgage upon completion.


  202. Grandizer on July 27, 2008 at 11:51 pm

    First timer here,

    I thought I read somewhere that you can avoid the monthly fee if your in a professional association? I can’t seem to find that info anywhere on their website? Is there somewhere we can find out which professional associations are valid?

  203. Grandizer on July 28, 2008 at 11:17 pm

    Thanks FT
    Engineers always get perks. I’m an Eng Technologist and don’t see that perk on my association’s website. That kinda bites because I’m frugal as well when it comes to these petty things. I guess its probably better off paying a setup fee of $700 if your shortened amortization is more than 4 years. But I guess you also have to be careful too because accounts like the All-in-One banking solution with Investors Group (the one I was looking at and who my CFP is with) charges extra for interact transacations and using cirrus. There is never anything for free and always some sort of crappy fee one must pay when trying to save money.

  204. Russell on July 29, 2008 at 9:27 am

    I’ve had the Manulife 1 account now for 4 years. I can assure you that this account saves you money. I am more than happy to pay the $14 for the hundreds of dollars of saving that I am realizing. More than that though, its the incredible flexibility of the account. Unlimited transactions, borrow whenever I want, pay down as much as I want and always knowing that my money is working for me and not the big banks. Those of you worried about a measly monthly fee… Don’t. You’re really missing the incredible opportunity this account offers. Don’t get me wrong, I’m not crazy about fees either, but you have to put things into perspective. Good luck everyone!

  205. FrugalTrader on July 29, 2008 at 9:41 am

    Russell, it’s great that the manulife one has been working out for you. However, it’s not the monthly fee that kills this program, it’s the high mortgage rates relative to discounted variables. I agree that the m1 makes everything simple, but simple in this case is very expensive.

    Please see this post:

  206. rwfreshmore on August 13, 2008 at 12:21 pm

    Hi All,

    I am a REAL novice. I have a 379k fixed rate mortgage (on 499k) at 5.4% from CIBC. I have 70k savings sitting in a sh*t low interest + fees savings account. I have about 80k available RRSP contribution room.

    I read a bit about the SM and was interested until i confused myself by reading a little too much. I had forgotten about it until i came across the Manulife One product a couple of days ago. The manulife product seemed to make sense to me even before connecting it to the SM. Then i wondered about the SM and this product.. if they could be used and ended up here.

    Again i am a real novice. I am frugal, good at saving money but like to keep it simple. I don’t mind complicating things so long as there is a guarenteed advantage that is understandable. If you were in a situation like mine described above what would you non novices do?

    Thanks to any and all replies!


  207. FrugalTrader on August 13, 2008 at 1:40 pm

    rw, if I were you, I would use the $70k in savings to pay down debt. If you have no other debt other than your mortgage, than use some of it to pay it down. Depending on your current tax bracket, it might make sense to contribute enough to your RRSP to bring you down a tax level.

    For a novice, I would side step the SM altogether and stick with the basics.


  208. Sir on August 14, 2008 at 6:12 pm

    The higher interest rate with the Manulife One is definitely not a deal-breaker. I’d much rather pay prime for 15 years than P-.5% for 25 years, according to the calculator. And when (if?) my paycheque increases, I’ll pay it off even sooner, without lifting a finger. And it’s impossible to put a $ value on the flexibility the M1 offers.
    As long as you have the financial discipline to handle a “massive line of credit,” it’s the best thing out there…

  209. Russell on August 15, 2008 at 11:37 am

    I agree with you Sir. Unfortunately the people discussing Manulife One on here are missing the biggest point of all. My income will be going against my debt every time I get paid. Everyone is so concerned about Prime – .5%. It just makes sense to have my income reducing my debt every day rather than sitting in a chequing account earning nothing. That has to be way more powerful than .5 % off prime. Add in the convenience, simplicity and faster pay down of my mortgage, there is simply nothing like it. I’ve been a client for 4 years and can’t speak highly enough about it.

  210. KingRay on August 28, 2008 at 2:19 am

    Just to throw another wrench in these discussions…

    Stats: 280K mortgage starting Oct 1 2008…and made the decision to go fixed 5 yr w Canadian Tire which is offering 5.1% fixed rate…low in my mind and as much as I was leaning towards the variable (I have a pre-approved prime – 0.75% open variable at RBC) I don’t want to be watching the news 8 times a year when the Bank of Canada makes a rate decision…just a personal preference and understand the cost of this insurance by going fixed…

    What I do like about the M1 and all the other all in ones was the instant application of savings to ones mortgage, so being the wizard that I am (mostly by reading all your great posts) I was thinking I’ll just lock in $230K (of the total $280K) at 5 year fixed 5.1% and the remaining $50K in an all in one vehicle (Canadian Tire one and only – no fees)…since I am anticipating having an accumulation of monies as I’m saving a bit for a wedding but like the idea of idling money offsetting some debt and earning 3.05% while I’m at it…

    I see it as a path to least resistance approach understanding the premium this costs but leaning on the risk adverse side I’ve eliminated alot of it by locking in the majority in the fixed rate product…

    Would wonder if anyone has a simple opinion on this approach…thanks!

  211. Joey Tom. on September 17, 2008 at 7:09 pm

    House Value of approx. $330k mort. @ 4.3% mort. remaining $175k. I have maybe $20k of other debt aside from a 2nd mortgage on a vacation property which has around $96k remaining @ a whopping 7.3% for another 2 years left ($130k value).

    What I’m wondering is the Calculators from the Canadian Tire All-in-one and the Manulife ONE websites. Say i can be 100% debt free in about 6.7 years… Vs. the pegged 25yrs. People can be “frugal” about $14 a month, ATB fees, and slightly higher Interest rate. But something tells me that in 18years with no debt i would be a millionare.

    Lots of things can change and curve that 18 year difference, another bill another vacation or on the other hand you can have a pay increase to offset the spending.

    What i’m looking for is the kicker, why shouldn’t everyone do the ALL IN ONE mortgages to get debt free faster and save when debt free. I don’t have a lot in savings myself, let’s face it if i can get 5-10% in paying down debt on my money why on earth would ever give a bank my money for 0.5% or max 3.0%. This is simple mathematics.

    I’m looking for an Int. / expert opinion. If you can be debt free in 25 years or 7 years with an ALL IN ONE account. Tell me why i shouldn’t have done this 6 months ago? Better yet you tell me why you haven’t switched yet or why you have and the benefits you are seeing. Prime minus 0.5% is not worth more than 18yrs of 25yrs of being debt free.

  212. DAvid on September 17, 2008 at 10:56 pm

    (Sigh) Please read the thread “The High Cost of the Manulife One Account.

    You are currently paying somewhere in the neighbourhood of $1700 – $1800 monthly on your debt to pay it off in 25 years. You would have to add another $2800 every month for the next 6.7 years to pay it off early using M1 or CTC AIO.

    BTW, I paid my mortgage off in less than 4 years 7 months using a regular bank.


  213. Lee on September 18, 2008 at 1:37 pm

    A lot of great comments. On the path we were on we would have paid off our mortgage in 24 years. On the new plan we will save almost $102,000 and have our mortgage paid off in 9 years.

    I don’t know if anyone has posted a link to the calculator for Non-M1 clients but I have an advisor that helps entrepreneurs and business owners and he has a good site that illustrates the ManuOne:

    There is an introduction video as well as the calculator. Below I have shared the calculator steps.

    Step by step (Start to finish, 2 minutes, seriously. Make sure your sound is on):
    Click “Begin a new calculation”. Input your information. Click “Next” after each screen. Finally Click “Explain”. It is very easy to follow and you will be supplied with a complete report at the end.

    VERY IMPORTANT: When you see your “ManuOne Number” click the “Explain Button” (bottom right). Make sure your sound is on for this part. If you want to learn exactly where the savings come from this part explains it.

    I want to share how this has helped me, here is my situation:

    My current mortgage was $175,000. When my wife and I purchased the home 14 years ago we bought it for $150,000… Notice the issue? We had not made any significant other investments and we had a higher mortgage than the original purchase price…(Thanks to one divorce, a boat and an addition to the house it is where it is = $175,000)

    Mr. L, Age 35 and Mrs. L, Age 32)
    Business owners
    $450,000 House
    $175,000 Mortgage – $1,099 Monthly Payment (5.6% Interest – 24 Years Left)
    $2,100 Penalty to get out of their RBC Mortgage (3 Months of interest – with a discount)
    $18,000 Car Loan – $438 Monthly Payment (8% Interest – 4 Years Remaining)
    $10,000 Line of Credit – $300 Monthly Payment (6.5% Interest – Currently no payoff period)

    $8,000 Savings Account
    $2,000 Chequing Account

    $5,000 Net Combined Monthly Income
    $2,800 Monthly Living Expenses (Not including debt payments – So… Bills, Gym Membership, Gas, Groceries, Insurance etc etc)
    $4,637 Expenses – Including debt payments

    Not only that but Manulife claims that if the ManuOne doesn’t do what they tell me it does they will give me $500 to switch back to my traditional mortgage.

    Talk to this guy (Dustin Serviss) about how to get the most out of your M1, he knows his stuff and has changed the way we live our lives. More cash flow allows us to do the things we want and not only that but we are paying our mortgage down quicker.

  214. DAvid on September 18, 2008 at 11:14 pm

    Two questions:
    Why were you carrying a $10,000 LOC at 6.5% when you had the cash in hand to pay it off? Alternately, why did you not put a $10,000 down payment on the car?

    Where does the $363 difference between your income and expenditures go? I’ll bet Manulife puts every penny against your mortgage for the next 9.7 years!

    Here’s DAvid’s solution:

    Pay off your LOC and get a HELOC at 4.75%

    Move your car loan to your HELOC, Your Car payment is now $0 and your HELOC is $18,000. Pay $363+ $300 + $438 to HELOC. It will be paid in 17 months.

    Go to your bank and renegotiate your mortgage to an Accelerated bi-weekly Prime -.75 = 4% you may pay a $700 penalty for this. In 17 months (once the HELOC is paid), add the $1100 you were paying to the HELOC to your mortgage.

    You will be debt free in about 9.3 years!

    (See, there is no magic to the Manulife One!)


  215. Denise on September 26, 2008 at 1:05 pm

    What happens with a M1 account if you sell your home before it is paid off?

  216. DAvid on September 27, 2008 at 12:42 am

    You would have to pay the outstanding balance on the loan, as there is no equity to back the loan. You may be able to negotiate a transfer of mortgage if you are buying a new home.


  217. Kris B on September 30, 2008 at 7:01 pm

    The M1 account is not closed when a house is sold, the purchase price is applied against the value of the M1 account, any surplus (Purchase price> mortgage) will be given interest at their current rate. If the difference is negative it will continue to be owed at prime. However it is true that the issue of equity then exists for this LOC.

  218. Konfusedaboutmortgages on October 15, 2008 at 2:44 pm

    Dear All,
    I have read this thread and wondered about my situation….I am ignorant of the basics and have been trying to gain insight on this and other forums. basically im a newbie first-time home buyer who knows squat. herei s my info, any advice is much appreciated…520K purchase price…350K mortgage

    1) option 1 CIBC mortgage at 5.05% closed 5 year rate (10/100 – ability to pay down 35k pre-payment and increase my biweekly payments by 100%)….

    2) option 2 M1 at 4.5% open, and 6% to lock in for five years….

    any thoughts given the current market that you would suggest? we have a total monthly net income of about 8K….

    any help would be greatly appreciated,

    best regards,


  219. Lee on October 16, 2008 at 1:29 pm


    Your strategy looks like would make sense. The reality is there is a lot of moving parts in your strategy and Manulife has found a way to package it in an easy to follow way. I have a business that involves sales and I have to give it to Manulife as they have found a way to market this. A Dodge 1 Ton truck I assume can pull roughly the same wieght as a Ford 1 Ton truck but people buy each of them for other reasons that stem from marketing/branding (as well as other features) but you get my point.

    Maybe I should be consulting you for advice? What are your credentials? I see you have made numerous comments (most of which negative ManuOne) on this blog and they seem to make sense but how do we really know…


  220. DAvid on October 19, 2008 at 1:49 pm

    You come here to shill Dustin Serviss and present as your personal situation the identical scenario as Mr. Serviss displays on his website (with a few names changed). You then direct readers to the same Manulife Calculator which has been debated ad nauseam on this blog, and repeat the refrain of how using this particular product will pay your mortgage off in 9 years instead of 24, suggesting similar could not be accomplished with your current banking mix, or by choosing other banking products.

    I, and others, have provided considerable information indicating the steps one might take with ANY bank to achieve similar or better results as Manulife offers, how the M1 product really works, and the reality of using the M1 product. I have no particular interest in any product, but do have a concern when folks have been led to a conclusion by the presentation of inaccurate information. To use your example, I feel like folk are being pressed to buy the one-ton dually, when a 3/4 ton better meets their needs, all the while being told the one-ton is a better deal.

    If you believe my comments make sense, then the next step is for you to individually corroborate them, (and count the steps). All I’m offering is information to allow you to question what another has offered you. I gain far less from this discussion than Dustin stands to gain from you.


  221. Kyle on October 25, 2008 at 11:39 am

    There is a thread on RedFlagDeals where many Manulife One customers are expressing anger over the sudden and unexpected decision of Manulife to discontinue reductions in the Manulife One base rate. The Manulife Bank Prime rate is now 4.00% and the Manulife One interest rate is 4.50%.

    It is a very itneresting read. Here is a link:

  222. DAvid on November 3, 2008 at 10:10 pm

    In another thread, Duncan asks: “Wonder if someone can offer their 2 cents?
    I’ve a fixed mortgage at 5.69%, 4 yrs remaining
    I’ve a LOC at prime. It’s the Firstline Matrix product.
    Should I take funds out of my LOC to pay down the fixed rate mortgage?
    If I do, the entire mortgage will be paid off before renewal and converted over to the LOC at prime.
    Would this make sense? Seems like prime is going to stay low for the next while right?”

    You want to watch for interest penalties on payment of your mortgage, so it would appear you have a number of options:
    – convert as much as possible of your mortgage without penalty to the HELOC, and make as many extra (double-up) payments on the mortgage as you can afford. These could include withdrawals from the HELOC to top up the extra payments if necessary.
    – pay the penalty of 3 months interest differential to convert to a lower cost mortgage (prime minus mortgages are becoming available again) at your current bank.
    – Pay the interest penalty of 3 months interest to move to another lending institution.

    If you have my luck, just as you finish the conversion of your loan, prime will reach 6%

    My $0.02.


  223. Pete on November 7, 2008 at 3:29 pm

    Now that anyone looking to take out a variable rate mortgage right now is faced with a rate of prime plus 1%, I guess a product like the Canadian Tire One & Only account would be a great choice?

    Even the Manulife One would be a better choice than a variable rate mortgage as it’s presently only prime plus 0.5%, although CT’s would be better yet as it’s rate is prime.

    This thread seems to point out the short-comings of this type of mortgage product, but I can’t find a better choice than CT’s account that’s open and at prime. They’ll even pick up the appraisal and legal fees if I switch over.

  224. dayLateDollarShort on November 7, 2008 at 3:48 pm


    Funny that you brought that up.

    I am actually in the middle of a transfer right now to a open variable at %3.99
    They are picking up the appraisal and legal fees as well.

    Though this is not a big bank, it is a well established credit union here in my province.

  225. Grandizer on November 9, 2008 at 11:56 am

    I think Solutions Banking All-in-One LOC (National Bank) is the way to go, its why I switched when my 5 year mortgage expired last July. It was really good timing. It is exactly the M1 but with no monthly fees and they take care of the legal costs and home apprasial so as long as you stay with LOC for 2 years as my CFP advises.

    The great thing is that I pay at the real prime rate which is 4% right now not the prime + 0.5% M1 charges.

    The other great features are that you can have as much subaccounts you want (I have 5) and no fees associated with it. These sub accounts can be fixed or variable. In one subaccount I’m doing a mini smith maneover with my DRIPS. I only implement this whenever I have cash for my DRIPS every quarter, I will pay down my main subaccount the available funds that I have for my DRIPS and then borrow the money from the investment subaccount to purchase my DRIPs. I leave all distributions/dividends re-invested.

    Since you can pay as much as you want, I can implement alot of ways to save money using this account. For example, whenever a special for VISA comes out once in a while for 1.9% interest rate for 6 months (in form of Visa checks), I take advantage by calling up Visa asking for raising my limit ($10,000). I then make out a check for the limit then deposit it in my main account to pay down the mortgage and only pay the interest. In 6 months, instead of paying 4% on $10,000, I pay only 1.9% which saves me about $1,000. That’s a free snow blower or snow tires! Just before the Visa special is up, you pay/transfer money to pay back the visa bill.

    The strategy is to leave as much money as you can in the account. For example, instead of paying car or life insurance or property tax monthly, pay annually but you gotta keep in mind, the thing is with these kinds of accounts, you have to be a good saver and be disciplined in your spending (not spending more than you make) or else your account can easily be deep in the hole.

  226. DAvid on November 9, 2008 at 12:22 pm

    I believe you’ve misplaced a decimal point somewhere. A 2.1% savings for 6 months on your $10,000 transfer is about $105. While this is indeed some change in your pocket, it needs to be weighed against the penalty that would be placed against your Credit Rating for carrying so high a portion of your credit card balance at it’s max.

    Also, with these accounts, yo not only have to save more than you make, you have to save CONSIDERABLY more than you make, as you have to properly budget your principal reduction.


  227. Pete on November 9, 2008 at 1:03 pm

    “Also, with these accounts, yo not only have to save more than you make, you have to save CONSIDERABLY more than you make, as you have to properly budget your principal reduction.”


    I don’t understand this paragraph. What do you mean by properly budgeting to reduce your principal? If you are a disciplined person and continue living as you would with a regular mortgage, isn’t your principal automatically reducing with your left over money at the end of each month?

  228. DAvid on November 9, 2008 at 3:54 pm

    Sorry, my typing error. it should have read “you not only have to save more than you spend, you have to save CONSIDERABLY more than you spend.”

    If you look through the comments on this blog entry, and the “High Cost of Manulife One”, you will see a number of individuals who do not see principal reduction as an expenditure. Comments such as: ‘My payment is much lower with….’, ‘My cashflow is more positive….’, ‘I can pay the minimum payment’, etc indicate not everyone shares the diligence you have expressed, and some seem to be hoping some magic in these accounts will reduce their mortgage faster than any other method. If you have diligence, (as described in the quote of Jared in comment105) you will rapidly pay off your mortgage in short time, no matter the institution you bank with; if you are not, you may end up carrying your debt forever.

    Stay on track as you have described, and you will likely be satisfied with the reduction in principal you see.


  229. DAvid on November 10, 2008 at 12:38 am

    Let’s try this one more time (it’s been one of those days)

    It should have read “you not only have to spend less than you deposit (earn), you have to spend CONSIDERABLY less than you deposit.”

    If you don’t leave enough in the account each month to reduce the principal by more than you would with a regular mortgage (and other loans) you will not see a satisfactory result.


  230. M Burns on November 11, 2008 at 1:33 am

    Anyone considering switching to the M1 account should read the thread at that was posted here earlier. I am a new M1 account holder and I am very upset and disappointed with the product and their service. Don’t say we didn’t try to warn you first!

  231. brett on November 20, 2008 at 4:19 pm

    I have been reading a lot about the M1 and other associated products. so thanks to all of you as you are helping me greatly by sharing your experiences!

    im still on the fence. i have a fixed 5.15% with $301k owing. i have a total of $47k of other debt at an average of about 5%. my house was appraised by M1 for $400k so i can get a $320k line.

    Im thinking about the M1 and also the National Bank offer as its tied to prime and no fee.

    The thing i like about these all-in-one solutions is that there is no min monthly payment which will help me regulate my finance better. so with that getting a variable + HELOC wouldnt be a solution to suit my needs.

    as for the issue around the rate change i have an opinion: the advertising was clearly misleading. but the agreement that all of you signed had the real info in it. however i do agree with you that your anger about it is totally justified. it was misleading. but i dont think for potential clients like myself its a point of concern. its clear now that the rate is not prime. going in i know what to expect. but i wish the rest of you luck especially if you decide to take legal action which may be warranted.

  232. MarS on November 21, 2008 at 2:10 pm

    I have this Manulife one account – and to make one correction if I can – is that the rate is not prime as in Bank of Canada PRIME – it is the manulife base prime – which is a rate that they set themselves and can go up and down depending on the current market . Ie. today Prime rate is 4% but the manulife rate is 4.5%
    When signing up for the account and doing the final papers my question and concerns were brought forward when I read the exact words, their legal department assured me that it is based on the Bank of Canada Rate, now 6 months later I find that they were wrong. With loosing tonnes on money in the market by using the loan based investing Smith Manover, I have a call back on my loan and now find out too that the prime rate is not the prime rate, it is an indepentant rate that is set. So I loose again, need some solutions on how to get into a winning situation.

  233. not rich yet on January 27, 2009 at 1:10 pm

    I think M1 is great for people like myself who get laid off once in a while. If one month your a little short in cash you can get away with a lower payment on you debt without notifying the bank. Just pay the interest if you had too .

  234. Joe Ornato on February 25, 2009 at 12:31 am

    I have read through the threads and I must say that everyone does not truly understand the real issue with all in one accounts/lines of credits and traditional mortgage HELOCS. I am a mortgage broker agent and specialize in a process called The Mortgage Secret which is a step by step that educates you on the potential of becoming debt free rapidly by using the all in one product PROPERLY to pay down debt.

    The problem is that psychologically 50% of people will NOT use the account the way it is theoretically sold to them which is the controversy here and the reason for mixed reviews.

    I can talk for days on this subject because I know it so well; I live these products and have found the best and most cost efficient one to be National Banks All In One. That being said, these are all TOOLS, not solutions. You people think that the mortgage, the rate or the features of a product are going to change your life! This is wrong. It is how you use these tools to your advantage within a well defined plan that will yield results. So let me explain:
    (Please note that all of my material is Trademarked).

    1) The Banking Trap TM: In a traditional banking set up the chequing account accepts the pay and is used for all fixed expenses such as mortgage, property taxes and utilities. It is also used for variable expenses such as groceries, gas and (in my case) Starbucks, etc. You FEEL confident when you have paid both your fixed expenses and variable with what is left over, but most of us still manage to spend what is left over, and even if we do not, it will sit there just waiting for an emergency. The point here is the only way to match the rapid pay-down power of an all in one product is to take EVERY SINGLE DOLLAR FROM YOUR BANK ACCOUNT OUT EACH MONTH AND PUT IT AGAINST YOUR MORTGAGE. when I ask most customers to envision this, I ask them how they feel and 100% of the time, they say it is not possible because “what if something comes up”. That’s The Banking Trap TM. Banks have conditioned us around the structure of their products to develop what I call FBSA (Fear Based Savings Accounts). If you really think about this, any money left over in your bank account each month that is NOT applied against your debt is money you are borrowing 24 hours a day and 7 days per week. even if you had the guts to apply every dollar from your bank account to your mortgage, what would happen if you did need the money quickly? The way the mortgage is designed, you can’t get the funds quickly. With Matrix and Scotia and any other Bank HELOC (non all in one), your chances of bouncing a cheque are huge if you don’t monitor daily.

    2. The Smith Manoeuvre can be done with any of the products, but again if you want to achieve the Smith Man conversion quicker, then having an all in one system allows you confidently pay down debt with fear of hording money in a chequing account and pulling it back out into the investment. However, psychologically, most people won’t do this unless they have a buffer of a few thousand dollars somewhere for an emergency fund.

    3. If you truly understood the power of The Mortgage Secret Using an all in one model, you would know that with the right ingredients, I can pay off a mortgage quicker at 7% than a traditional mortgage at 4% simple by using it properly. Again, the only way to achieve the same result is to apply EVERY left over dollar against your mortgage. you see, banks have taken control of your structure so that we focus on the rate, not how we use the product to save money!!!! This is what I call the Conspiracy Theory TM.The mortgage industry in Canada topped $800 billion last year! If everyone knew how to make that 50% less, do you think that would affect bank profits?

    4. People are being sold Manulife, Can Tire One and National All In One wrong and unjust! The professional is NOT taking the time to truly help the client identify their real lifestyle expenses. This is why we use the tool we call Your Lifestyle Snapshot TM. This tools forces the client to scrutinize their expenses and study them so that we can properly analyze numbers based on our experience with past clients and our very one accounts! I bet you that 50% of current clients in these products are feeling no progress! Boy I’d love to consult with these clients…..oh there’s my sales pitch! But seriously, people are being sold products as solutions and not given proper coaching and advice. Did you know that advisors get a trailer fee for the Manulife One that each of their clients get? Can Tire is based on sales goals and National Bank pays brokers like myself 33% less commission than a traditional mortgage, so that’s why our industry doesn’t even bother with this. I truly believe that for the right person (which is many more than you think), this is amazing and financially freeing!

    5. Financial Bridging TM: Most financial advisors want their clients to invest for the future. So they start these pretty plans such as PPP programs and Smith Manoeuvre programs, but one the average Canadian gets handed what I call a Life Event such as needing a new vehicle or putting a kid through college or the transmission breaks down, the first thing they stop is their investment program. This is “start and stop investing”. Why does this happen? Well, we want to invest for the future, but we are constantly trying to clean up the debt from the past in order to boost our confidence. The result is we are underfunded for retirement according to every statistic I read.
    Using our system Cash Flow Mastery TM, coupled with The Mortgage Secret and an all in one system, clients can get their cash flow and debt more than on track so that in a year or two, their financial confidence will be ripe with appetite to invest more aggressively….That’s Financial Bridging; closing the gap from the past, mastering the present so that we can make great gains for the future.

    5. Anyway, enough rambling. I love this topic and I am glad people are chatting about it, but the topic is misunderstood and I’d be glad to discuss things at anytime as professionals and as clients.
    Joe Ornato
    Take care.

  235. csplice on February 25, 2009 at 9:47 am

    Mortgage HELOC + no fee chequeing account is better than any all-in-one account!!! The reason is user fees.

    Both my accounts are fee free. My only expense is the eternally borrowed balance in my chequeing account that Joe Ornato mentioned in the previous post. The interest cost on this $2,000max float is less that the monthly user fees applied by the all-in-ones.

  236. DAvid on February 25, 2009 at 11:34 am

    What happens if I take my $200,000 mortgage at 4%, add the $400 per month I save over your 7% mortgage to each payment? It seems to me I will pay my mortgage off much sooner and at lesser cost than you would, even if I do not put every penny through the all-in-one account. If I further add some or all of the excess I have at the end of each month to my mortgage, will I not pay it down even faster and cheaper?

    Can’t put a Trademark on common sense.


  237. Joe on February 28, 2009 at 12:37 am

    Appreciate the responses, but you are stillmissing the psychological point. You CAN have the same affect by manipulating a traditional mortgage versus a true all in one,but the chances of actually doing it are slim because you would have to put EVERY DOLLAR from your bank accout against the debt in order to achieve the same pay down. So, What I am saying is that any “amortized payment schedule” will cost more over time compared to an all in one unless you sink every single dollar against the mortgage. It’s that simple. The user fees (PS National Banks is free) don’t matter in the grand scheme of things. How can the average consumar drain their bank account to zero every week in order to get ahead? If you are one who can, then great! However, most cannot do this.
    The other observation I have is that I have used this system to take my own amortization for 15 years down to 2 by doing nothing other than flowing my icnome through my debt. That psychological ability to put everything against your debt and know that it is there if you need it is so reassuring to the average consumer.
    Anyway, I know that within a good structure, this system works; I live it and so do my clients. Don’t get me wrong, they can be dangerous accounts for the wrong person, which is why I stress a good upfront analysis before doing this, but they do work if you have the right ingredients; and it’s not rocket science…ou’re right about common sense.

    Take care

  238. Joe on February 28, 2009 at 12:49 am

    David,I forgot to address your common sense issue about 7% versus 4%. Only if you drain every dollar from your chequing account every single week for the life of the debt could you obtain the same result or better in a traditional mortgage. You see, if you have the right combo of income versus expenses (note you must have the right combo), you will beat out any rate on a traditional mortgage because it is how you use the account which reduces the interest you pay. IOf you study the Manulife One calculator and compare, try pluggin in $200,000 as the mortgage, put in 7% as the manulife One rate, put in $1500 per month for a traditional mortgage. Then take an NET Income of $7500 and expenses of $3000 (which doesn’t include the mortgage payment anymore), and you will still be ahead. I just looked at the Manulife calulator and they do not allow you to increase the Manulife Rate which is a form of a “sales pitch”. In my own calculator, I alwayd change the all in one rate to 7% to compensate for higher interest rates which could occur.
    If you really take the time to understand what I am saying, you will see why this is powerful for most people. There are not many people who can just add hundreds of dollars extra to their mortgage becuase of fear.

    Anyway, I like these dicussions and appreciate talking.

  239. DAvid on February 28, 2009 at 1:31 pm


    To use your example $7500 (income) – 3000 (spending) – 1500 (mortgage at 4%) = $3000 (savings) left at the end of each month. What do you expect these folks to do with this $3000; burn it? Even if they spend an additional $500 per month, and put the additional $2500 against the mortgage they will be well ahead of your proposal. Thus in my scenario, there is no need to “drain every dollar from your chequing account every single week for the life of the debt “, but actually only have to allocate about 80% of their savings, to meet the same goal, while you would demand they allocate 100% of their savings to the same goal. Should my mortgage holders be able to apply the additional $500 in some months, they will be even further ahead.

    Also, your numbers are unrealistic, as you are creating a mortgage scenarion with approximately a 4 year amortization. and as such the difference in interest rates is minimized. Run yhour numbers again with a mortgage of $650,000 and the same income. You post yours, and I’ll post mine.

    What is upsetting to me is that folks like you with your “Trademarked” tools are actually providing this mis-information to the unsuspecting public as having some real validity, when actually it is smoke, BS, and mirrors.


  240. DAvid on February 28, 2009 at 1:38 pm

    Joe said: “I have used this system to take my own amortization for 15 years down to 2 by doing nothing other than flowing my icnome through my debt.”

    So you admit that before you became a shill for this product that you so poorly understood how mortgages work that you could not even choose an appropriate amortization period to maximize the benefit of borrowing from the bank. Your persistent application of mis-information presents a danger to anyone who adopts your strategy.


  241. Joe on February 28, 2009 at 7:22 pm

    Hi David, thanks again for your words. There is no need to defend this system or another. All are tools and it all depends how they are used. I have used them to gain wealth to my advantage and do not expect you to follow what I say. All I intended to do here is share some information on how these tools CAN work. That being said, every single products has davnatages and siadvantages. It is the process within which they are used that will yield results. Anyway. I have seen the psychology of how people spend money and in a traditional set up it is reall impractical to get ahead unless you are specially disciplined.

    Take care

  242. Joe on March 1, 2009 at 12:11 pm

    Sorry to post again, but I had to run last time and forgot to mention one more thing. Choosing the option that is right is highly individualized. The tradmarked tools that I spoke about are cash flow crunching tools and concepts to help with how we spend money and to identify where it actually is going and how it goes. They are not used to sell these all in one products, so I apologize if I misrepresented those that way.
    Again, you comments about applying 80% of savings are absolutely correct and I won’t dispute those. However, using the 80% rule: most people will NOT do this and this is how an all in one system can help restructure habits in order to acheive the rapid pay down goals. Again, I am alluding to the pschology of how we spend rather than that one system is better than another. I speak in terms of the average borrower. The whole intention is to have people educate themselves about why and what they want before doing anything. That’s all. Anyway, this is the last I’ll speak on the subject because I am not trying to convert anyone; just provide a different way of analyzing things and it doesn’t just come down to the srvice charge which is what got me going int he first place.
    Have a great day!

  243. DAvid on March 1, 2009 at 12:37 pm

    But Joe, instead of using peoples fears & mis-conceptions, why not simply answer them?

    First, based on your example (I admit I made a calculation mistake in entry 245 above), the 4% mortgagor would only have to pay $1100 per month of their $3000 savings to be ahead of an All-in-one at 7%

    The Banking Trap — So the mortgagor does not have to pay EVERY SINGLE DOLLAR FROM their BANK ACCOUNT OUT EACH MONTH AND PUT IT AGAINST their MORTGAGE. Any extra they do pay to the mortgage is available to withdraw again should they need it (RBC), so if something truly major comes up that exceeds their cushion, they may need to arrange to withdraw some of their prepayments (takes a day or so). They could also make use of a HELOC by making an annual prepayment to the mortgage from the HELOC then paying it down through the year. This would give a cushion in a similar manner as an All-in-one. Finally, all banks offer overdraft protection on chequing accounts. If the cheque you have written exceeds the overdraft, it would be wise to set up an automatic transfer from the HELOC in timely fashion to cover that withdrawal. Since you don’t have to worry about every last penny of interest, this should not be a big deal (remember, you have $1900 of excess cash each month in my plan, much of which you could place against the mortgage) and you can move the money a few days early if necessary. No bounced cheques.

    Smith Manoeuvre — the same buffer would be needed with the AIO, as, if it is maxed, the comfort zone you repeatedly describe is not there

    The Mortgage Secret — You can pay anything off quicker if you throw more money at it. The question is how much are you paying in total. Participants on this blog have repeatedly shown that the lowest interest rate is the best — you just have to have the discipline to pay off your debts. This goal can be reached just as easily, and at less cost with a traditional mortgage at a lower interest rate than you promote. The banks also know that if you pay off your mortgage sooner, they have the opportunity to sell you something else — cottage loan, RV loan, boat loan, investments, etc. Your Conspiracy Theory is just that — conspiracy.

    The AIO salesman does not care about the client’s real lifestyle expenses, in similar manner as the salesman of any other product. Does the car salesman really address your needs, or just your wants? This is no different — you present your product in a light which will convince (coerce?) the client to choose yours over another product which is as good or better to meet their real needs. That’s sales. While you can ‘force’ your clients to scrutinize their expenses, it is a whole other step for them to adopt a significant change in their lifestyle. While some are prepared to do so, many will fall off the wagon over time.

    When an average Canadian gets handed a ‘Life Event’ they stop saving for the period of addressing that cost. Since cutting their utility payments, etc is considered unwise, discretionary spending is affected — including savings, prepayments on a mortgage and investing. That’s life — we balance our wants and needs as best we can. Of course, if I have an extra $1900 per month with my 4% mortgage, that balance becomes a lot easier.

    I believe most folks use AIO as intended. These products were created with ease of withdrawal for one reason only — to increase spending on the part of the consumer, and interest returns to the bank. While they are being promoted as paying your mortgage faster, they are intended to keep the mortgagor tied to the bank for a far longer period than a traditional mortgage. All-in-Ones, are meant to be, and are sold as, a loan for life. It has been repeatedly shown that the simple step of flowing your income through the AIO has little effect on the balance — it is leaving money in the account that you would not have done otherwise that makes the difference. Since this is a simple choice (do I spend, or do I save), it can be done in many ways.

    Most financial advisors want their clients to buy the products they sell. My advisor has stated the purchase of a few quality dividend paying companies and holding them will outperform most portfolios he could create, however he still wants to sell me mutual funds.

    The point I am trying to make here is that if the trademarked products you use in assessing your clients needs were truthful, you could put together a plan using ANY set of banking products and get your client the ‘best buy’. However, your presentation indicates you are not interested in your clients best interests, but like any other salesman, (and just about all of us, no matter what we do) are looking first for your own best interests, and only then to your clients.

    BTW, during the first 4.5 years of my traditional mortgage, I had reduced my 25 year mortgage to 10 years left (i.e. paid 15 years off in 5 years), and was planning to reduce that timeline even further, when a ‘life event’ came along, and I paid it to zero.


  244. DAvid on March 1, 2009 at 12:46 pm

    I wrote post 249 while you were writing 248.


  245. Thought of the day on March 5, 2009 at 2:07 am


    I think the audience in the blog would appreciate hearing what you do for a living and what credentials you have. You have well thought out opinions but it would be nice to at least know your input is creditable.


  246. FrugalTrader on March 5, 2009 at 8:24 am

    thought of the day, does it really matter what DAvid does for a living? It’s clear that his comments are well articulated and logical.

    Because I’m trained as an Engineer, does it mean that my ramblings about personal finance aren’t credible?

  247. DAvid on March 5, 2009 at 5:10 pm

    Thought of the day,
    You are welcome to corroborate or challenge my opinions at any time. If you follow my posts, you can find and use any of the tools I use to derive my answers. All are readily accessible on the ‘net, or already exist on your computer.

    Unlike some others on this blog, I am not selling anything, nor promoting any particular product(s). However, I do hope my comments cause others to look more critically at the information presented to them, and complete their own (hopefully) accurate assessment of that financial situation. To date on this blog, we have seen numerous claims made by folks as to the great benefit of some product or other they sell without any information which would allow a calculation or confirmation of the information presented. In some instance, there has been a certain “trust me, I’m a financial professional” about the advice presented, again without substance.

    I know my comments have helped some folks arrive at a decision which benefits them the most, and am quite satisfied with that service to them.

    Well, lunch is over & I’m off to work.

    Oh, the name is DAvid.


  248. DAvid on March 6, 2009 at 11:37 am

    BTW, “The Mortgage Secret” sounds very much like the United First Financial Money Merge Account discussed in entries 201 – 202. I leave readers to follow up on the discussion on Fat Wallet themselves.


  249. adamkah on March 6, 2009 at 3:51 pm

    Speaking of the M1, my cousin and I (very close since childhood) have had off and on arguments over the account since early last year. I have a traditional mortgage at 4.9% coming to term in Sept. He ended up paying some $1800 in penalty fees to break out of his tradtional mortgage to move to Manulife last fall.

    I am now telling him to lock in all or some of his mortgage at Manulife’s posted 5-yr term of 4.45%. With the M1 rate at 3.5% anyway, it’s really not a huge difference. Over the next 5 yrs, I would doubt that the M1 rate would average below 4.45% as interest rates only have to rise 1% to make locking in a wise decision.

    As for me, come September, I will have to look at all my options… anyone have any thoughts on fixed or variable for later this yr (ie: what will rates do over next few yrs)??


  250. 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.


  251. 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!

  252. 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.


  253. 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.


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

    I think Manulife waves the fees for professional associations membership.


  255. 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?

  256. 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.

  257. 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….


  258. 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).

  259. 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.

  260. 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?))

  261. 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?

  262. 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.

  263. 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!

  264. 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…

  265. 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.

  266. 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.

  267. 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??

  268. 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?

  269. 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?

  270. 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.

  271. 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.


  272. 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.

  273. 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.

  274. 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.

  275. 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.

  276. 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.


  277. 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.

  278. 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.


  279. 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.

  280. 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.

  281. 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.

  282. 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…

  283. 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?

  284. 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.

  285. 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.

  286. 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!

  287. 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.

  288. 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.


  289. 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.


  290. 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.

  291. 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.

  292. 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.

  293. 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.

  294. 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?

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