I have had a Manulife One account for several years.
As the name implies, I use it as my one account, for personal income and borrowing.
What I think makes it unique is the way that interest is charged, or not charged.
With the ManuOne account, if you had a home worth, say 1,000,000 dollars, you would open up a ManuOne account and you would have a single account, with a standing line of credit for up to 800,000. Lets say, in addition, you had several rainy day savings accounts, worth 200,000, earning practically zero, at your favourite bank (s).
You could open the Manulife One account on the first day of the month, and pay off your mortgage at another institution. (assuming the mortgage cancellation fees weren't onerous).
Now you owe Manulife 200,000. So you move all your other savings accounts into the Manulife account on the second day of the Month. Your Manulife One account shows that you owed 200,000 for one day. You only paid interest for one day.
So right away, you've eliminated the interest payments on your current debt to zero, just by depositing your other savings account balances into the ManuOne account, which were previously earning zero. If you needed access to money, you can borrow, on demand, up to the 800,000 credit limit on the ManuOne account. No paperwork, it's just like it's your own money.
The idea, is to also deposit all your paycheques into the ManuOne account as you receive them.
If you had steady income of 12,000 per month, going into the ManuOne account, and no borrowings, you'd build up a surplus in the account.
If somewhere along the line, you needed to borrow 20,000 (or 800,000) you simply transfer the money, like any other account, and pay the interest.
But, on the day that your 12,000 paycheque is deposited, it reduces your debt, and the interest, by 12,000. As you go through the month, and your bills reduce the 12,000 to lets say, 7,000, your debt is still reduced by the 7,000 surplus in your account.
I think this method of calculating the interest you owe, works in your favour, over time, since my understanding is that other banks won't reduce your debt on the LOC by the surplus you have in your checking, or savings accounts.
- The interest Manulife charges is about .5% higher than some other LOC's.
- Also, the monthly account fee is 14.00. So these are a bit higher than other institutions.
For me, the slightly higher interest, and the monthly fee is offset by the more favourable interest rate reductions and calculations.
If you go their website, they have a very useful interest savings calculator which shows your long term savings.
- You can also track any debt you may have incurred, for investment purposes, by creating a simple sub-account. Then print this out and hand it to your accountant so you can deduct investment interest charges. The money is super simple to get at, just like your own cash in your account.
- Upside
- You also get a debit card, a credit card, and can use it like any bank debit card, almost everywhere.
- I you have a surplus, they have an "Advantage Account" which currently earns 1%, which is attached to the ManuOne account.
- If you're a retired person, you could get up to 50% of the value of your home, as a line of credit, with very little, if any, financial underwriting.
- Downside:
- Manulife has no local branches. They use independent brokers and 1-800 numbers to service the accounts. If you wanted a large transfer to your lawyers account, in order to buy a house, you may have to wait 3-4 days to get the money into your lawyers account, if you started the process on a friday. I've found the 1-800 service to be excellent, and haven't missed not having a local branch.
- The Line of Credit is only available for personally owned homes, and it's a Demand Loan. So if for some reason, they stopped liking you, they could call it in. Although I've not seen it happen to date.
- Since it's just like cash, if you're not disciplined, you could easily create a lot of non-investment debt.
In the interest of full disclosure, I'm a broker for Manulife products, but use it personally and regularly.
