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National Bank’s All-in-One Review

Today's article is a guest post from The Financial Blogger who writes about his experience with the National Bank All-in-One mortgage.  This mortgage product is a readvanceable mortgage which can be incorporated with The Smith Manoeuvre.

Following-up on Million Dollar Journey and Melanie’s work on the overview of the best mortgage products for the Smith Manoeuvre, I decided to share my own experience with the National Bank’s All-in-one. You can follow my monthly updates on my own Smith Manoeuvre at TheFinancialBlogger.com as well as many other articles related to personal finance. 

Product Description 

The All-in-one is a pure Home Equity Line of Credit (HELOC). In fact, there is no “conventional mortgage” attached to the property. Therefore, you get a substantial amount into a form of a line of credit which you can divide into many sub-accounts. The main point of having sub-accounts is to be able to separate different sources of liability under one main loan (the HELOC). By adding sub-accounts, you can keep track of your mortgage, car loan and investment loan with the same lending condition. 

Rate and Qualification Requirements

The All-in-one offered as a first rank lien on your property is Prime + 0. Prime rate is now established at 6.25%. Unfortunately, there is no negotiation regarding the rate as the All-in-one operates as a line of credit and banks are not likely giving you below prime on lines of credit. 

In order to qualify for this product, the credit requirements are higher than regular mortgages. The main reason being that is because the individual will be left with a fair amount in revolving credit. Most people might have hard time managing such amount of credit available anytime. Nonetheless, if your Total Debt Servicing Ration (TDSR) is in line and you have a strong credit history, you should not have any problems getting the All-in-one. 

Implementation of the All-in-one and Main Features 

National Bank’s All-in-one is offered up to 90% of the property value. Please note that the regular All-in-one (which is not insured by GE or CMHC) is at 75% right now. Since April, you do not have to insured a mortgage with 20% cash down. This will apply to the All-in-one shortly but not yet available at the moment. An appraiser chosen by the Bank will appraise your property and determine the value.  

You have the option to split your All-in-one into several accounts. I personally have 3; A for my mortgage, B for the investment part of the Smith Manoeuvre and C for any other purposes. You have the option to set fixed or variable limit on each sub-accounts. Unless you want to add a third party on a small sub-accounts (like your children for example), I strongly suggest to keep all sub-accounts variable. It will provide you with more flexibility and you will be able to operate the Smith Manoeuvre. 

Please also keep in mind that you have the option of ordering cheques and debit cards for each account. As previously mentioned, you have the possibility of adding a third party user to a sub-account. Therefore, you can easily “co-sign” for your children’s line of credit as you will provide them with the access to credit. Each account is accessible from internet or through telephone banking. As it is a line of credit, you can use any sub-account as a regular bank account and keep a positive balance. Many other features are offered and I suggest you to visit nbc.ca for more details. 

What I really like about it 

I think that one of the best advantages of the All-in-one is its flexibility. The creation of sub-accounts with variable limit is a great help setting up a Smith Manoeuvre. On thefinancialblogger.com, I mention how the All-in-one can be used to implement a Smith Manoeuvre. 

The fact that you can use the All-in-one as a regular bank account and with internet access makes this product accessible any time for absolutely any use. This is definitely an “all-in-one” HELOC. As any other type of lines of credit, you can make lump sum payment any time of any amount and there is no penalty fee. 

There is always room for improvement 

Unfortunately, no financial products are perfect. The All-in-one’s rate is set at prime. You can easily beat this rate with a conventional mortgage. The flexibility offered throughout this product as a price and this is being reflected through its rate. As this is a pure line of credit, you do not have the option of weekly or bi-weekly payments. You can get around this by setting up a bank account with the National Bank and set a weekly or bi-weekly transfer into the All-in-one. Unfortunately, this may incur fees depending on the package you chose with the bank. 

Conclusion 

I do not think I will reconsider my choice for implementing a Smith Manoeuvre. I think the All-in-one was partly designed to make the SM easy to operate and the sub-account feature allow a clear tracking of your interest. Its flexibility is definitely a plus for this product. I am well aware there are not many National Bank Branches out of Quebec. However, you might want to look into the Investors Group’s All-in-one (also available with London Life and Great West Life) as they are in a partnership with NB and offer a very similar product. I know also that the All-in-one offered by IG is available for 2nd rank behind other financial institution. 

All-in-one Summary 

I use the same chart done by Melanie on myvirtualmortgagebroker.com. As you can see, there are some differences from my experience: 

Available through: National Bank, Investors Group, London Life, Great West Life.

Maximum Loan-to-Value: up to 90% (75% without insurance, soon 80%).

Minimum Credit Score: I would say over 650.

Maximum Loan Amount: Unlimited.

Available Mortgage Terms: None (Pure line of credit).

Mortgage Interest Type: Variable (Prime for 1st rank, Prime + 0,5% for 2nd rank).

Appraisal, re-advance or other monthly fees: Appraisal fees, registration fees (IG, LL and GWL pay for 1% of the All-in-one value up to $1,500 for overall fees).

LOC Interest Compounding Frequency: Monthly.

Pre-payment privileges: Up to 100% anytime.

LOC is callable any time: Only upon default.

Automatic LOC Increase After Principle Payments: LOC already at maximum of the property value. Need a new appraisal to increase the All-in-one limit.

Must re-apply to Increase LOC after Principle Payments: no.

Home can be reappraised during term to increase LOC: Yes, with a new appraisal and maybe additional registration fees.

Maximum Credit Lines: 5+.

Automatic Investing from LOC: Yes. You simply have to provide a void cheque from your designed sub-account for automatic withdrawal to your investment account.

Portable to another House: The All-in-one must be close and you must reapply.

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FT About the author: FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 29 comments… add one }
  • The Financial Blogger August 7, 2007, 8:44 am

    Thx FT for posting my review.
    If anybody has a question on the All-in-one, please feel free to ask through this post or at http://www.thefinancialblogger.com

    Cheers,
    FB.

  • Daniel M, August 7, 2007, 12:44 pm

    I have opted for the Manulife One account which acts in the same way. Internet banking, sub accounts that can be set at a fixed rate and free ABM transactions at enough places to make it worth my while. http://www.manulifeone.ca

    I have started a small blog where I will go over every step of my implementaion of the Smith Manoeuvre. danmorel.wordpress.com

  • FrugalTrader August 7, 2007, 12:52 pm

    Dan, with the high distribution of your dividend fund, make sure that there is no ROC in the distribution. If there is, then it will affect your interest deductibility.

  • FourPillars August 7, 2007, 1:13 pm

    I think if you have a large mortgage and are paying prime for it, you are costing yourself a lot of money.

    Mike

  • FrugalTrader August 7, 2007, 2:11 pm

    Yes, from the description it seems to be quite similar to the M1 mortgage.

  • The Financial Blogger August 7, 2007, 3:01 pm

    FP,
    You are right, that is the main flaw of the All-in-one right now. However, if you get it with any Power Corporation Division (IG, LL, GWL and Canada Life), you can have a conventional mortgage along with the all-in-one as a second rank.

  • Moneydork.com August 8, 2007, 11:30 am

    Thanks for gathering all of this information. I hate having to sift through pages and pages of a banks info just to find out the details, and then you never even know if it’s any good. Thanks again!

  • Canadian Mortgage August 8, 2007, 6:47 pm

    FT,

    Great post! I called NBC again to research the differences in what we were told. This time I spoke with one of their business development people (last time I spoke with a broker rep). Here’s the updated feature list based on what he confirmed:

    Available through: National Bank (I am keeping NBC’s version separate from other institutions’ products because there are slight differences)

    Maximum Loan-to-Value: Up to 90% if insured (75% without insurance/80% starting in September).

    Minimum Credit Score: 670 (confirmed)

    Maximum Loan Amount: $500,000 for stated income; unlimited otherwise.

    Available Mortgage Terms: Unless you go with the high ratio option (i.e. 90%) there is no term so to speak. It’s fully open and–as you note—basically a line of credit. If you choose the high ratio option the term is 5 or 10 years.

    Mortgage Interest Type: Variable

    Appraisal, re-advance or other monthly fees: Appraisal fees and $2.50 monthly for each sub account after the first one

    LOC Interest Compounding Frequency: Daily

    Pre-payment privileges: Up to 100% anytime.

    LOC is callable any time: Only upon default.

    Automatic LOC Increase After Principle Payments: Yes. The LOC sub-account automatically increases when the “mortgage” sub account is paid down. The LOC is fixed as you noted so a new appraisal is necessary to increase it.

    Must re-apply to Increase LOC after Principle Payments: No

    Home can be reappraised during term to increase LOC: Yes. New application required plus legal fees.

    Maximum Credit Lines: 5+.

    Automatic Investing from LOC: No. However, this is a matter of semantics. You can use pre-authorized debits as you note. There is no automatic “push” of funds into your investments each month, however. That part must still be manual–at least for NBC’s version.

    Portable to another House: As you note the All-in-one must be closed and you must reapply.

    We’ll keep honing all the comparisons until hey’re right on. This is a tremendous amount of data so it may take a few iterations.

    By the way, I’m still waiting for TD and IG to confirm a few details on their products.

    Have a wonderful day,
    Melanie

    P.S. ING has a new Smith Manoeuvre mortgage due out soon as well!

  • Ed Rempel August 14, 2007, 1:31 am

    FB,

    I wouldn’t use any of these mortgages. You essentially just have 2 credit lines – not a readvanceable mortgage.

    The National Bank All-In-One (and the IG version) do not automatically readvance. As you pay down a mortgage (or even just one credit line), you do not automatically gain credit in your investment credit line.

    There is a minimum readvance (either $5,000 or $10,000) and you have to go in and sign to get it. So, you cannot reborrow the principal from your mortgage payment each month. You would have to wait a year or 2 until you have paid down the minimum $10,000.

    On top of that, you are paying thousands extra because your mortgage is at prime, when you can get a mortgage far below prime (as you mentioned).

    The All-In-One is only slightly better than just getting 2 unrelated credit lines – one for your mortgage and one for investment.

    I would not even put it in the category of readvanceable mortgages until they eliminate the minimum readvance and make it automatic.

    Several banks have real readvanceable mortgages. Why would you pay thousands of dollars in higher interest and not even get a readvanceable mortgage?

    Ed

  • Online Mortgage Broker August 17, 2007, 5:44 pm

    Just a few quick points for clarification.

    National Bank’s All-in-One product lets you open multiple sub accounts. If you wanted to, you could put your “mortgage” in one sub account and use a 2nd sub account to borrow money to fund investments.

    As long as the LOC sub-account(s) are set to a “variable limit” National Bank can automatically re-advance funds from one sub account to the other as the first is paid down.

    There is no $5000 or $10,000 minimum re-advance between sub-acounts but there is a $5000 minimum that applies to refinancing and increasing the client’s TOTAL credit limit.

    The above comes from National Bank’s Business Development Manager. Hope it helps!

    Melanie

  • Ed Rempel August 19, 2007, 10:38 pm

    Melanie,

    It is surprising how often what bank mortgage reps say turns out not to be true.

    We have a client with a National Bank All-in-One that had it set up by a mortgage broker before meeting with us. The broker and the branch mortgage rep at National Bank both assured him it was readvanceable, but when he tried it, the $10,000 minimum applied.

    This essentially meant he was unable to do the full SM until he could get out of his mortgage. We have a variety of ways to fake the SM with results not much lower, so we were able to work around it.

    This was more than a year ago, so perhaps they have improved the product, but our National Bank rep tells us the product is the same. We’ll check into it.

    This situation ended up being much worse. The client had signed for 1 year, but the mortgage broker subsequently changed it to 5 years and left him stuck with his All-in-One unable to do the full SM for 5 years.

    I hope you are right, Melanie, so we’ll talk to our client and see if he can set it up to be able to readvance now. However, until we have it confirmed, we still don’t consider the National Bank All-in-One to be a readvaceable mortgage for the SM.

    Ed

  • Online Mortgage Broker August 19, 2007, 11:01 pm

    Hi Ed,

    You’re right in that Bank reps do sometimes get it wrong. In this case, we contacted two different BDM’s at National Bank to confirm it.

    If you’d like, shoot me an email and I can reply with their names and contact information.

    Have a great evening,
    Melanie

  • Man From Atlantis August 20, 2007, 9:26 am

    Ed,

    I think the issue may be that your client had a mortgage and a mortgage cannot be linked to the “all in one”. If they were using a line of credit as their mortgage then a readvance happens automatically.

    I have heard that the National Bank plans to change the AIO so that a typical mortgage product can be linked. Until then it is just a multiple line of credit account.

  • Ed Rempel August 22, 2007, 9:18 pm

    Hi Atlantis,

    You are right. Our client at National confirmed it as well. Nothing has changed there. The All-In-One is not a readvanceable MORTGAGE. It is only 2 credit lines that are readvanceable.

    This of course means you are paying much higher interest (prime), instead of a lower mortgage rate. Prime -.85% is easy to get and .85% interest on most mortgages is a lot of money. Less interest also means more SM investment.

    You can have a conventional mortgage with it, as FB says, but that mortgage is again not readvanceable.

    We would not consider it for the SM.

    Ed

  • Online Mortgage Broker August 23, 2007, 2:37 am

    Ed, THANK YOU for pointing out the National Bank correction. You are right. In fact, comments from you and a few other readers have greatly strengthened the comparison and I really appreciate it. There are a few other corrections required as well and they will be done shortly.

    Separately, it seems that the quality of information offered by lender reps appears to be getting a bit less reliable these days. We’ve noted this in the following article that is appropriate to this discussion:

    Story Link

  • Bean Counter August 26, 2007, 8:24 pm

    Is there any monthly fees (on top of the $2.50/month/sub-account) associated with this HELOC?

    Question to Ed – Do you provide services to people living in the western Canada?

    Thanks

  • Accredited Mortgage Professional September 27, 2007, 4:34 pm

    There are a few lenders that offer readvanceable products without any adjustments and no minimums required. I personally have a line of credit portion that automatically changes with every payment I make on the principal of my mortgage. No consumer should have to pay bank fees on this product and I would recommend products that do not incorporate fees while obtaining the best rates available.

    When implementing the Smith Manoeuvre, I suggest keeping it simple, there are other options out there.

  • Online Mortgage Broker September 27, 2007, 4:39 pm

    Hi Bean, There are no other monthly costs besides the $2.50/account fee and interest. Have a great day, Melanie

  • jazzy April 1, 2009, 12:07 pm

    RISKS of this strategy

    I have been thinking about these products for over a year, still have not pulled the trigger.

    Here is the only scenario where this works:

    1. You are generating significant cash surplus every month and dumping into your HELOC acct (this immediately reduces your outstanding heloc on a one-time basis, which is good and equivalent to an after tax return equivalent to the interest rate on the loc). You must not need this cash for current and future expenses, insurance premiums, rrsp tfsa, resp contribs, etc.; and therefore it grows.

    If you look at Manu One’s demo, it is really the consistant net accumulation of excess funds month after month that allows the shaving of years of interest off your loans, but the way I understand it, you have to be generating non trivial net free cash each month, that you would normally invest or worse (or better these days) hold in an ING direct acct.

    If like many people, you have 2 cars, life insurance premiums, rrsp, resp, maybe tfsa contributions, etc, and you don’t have a lot of excess free cash, whatever you are putting into the account, if anything (worse case scenario you are increasing your loc outstanding because you cannot make ends meet, thus using excess home equity like a chronic emergency fund) will not offset a rate that is potentially higher than a fixed or variable 5 year mortgage that is locked in at the right time.

    2. Currently, this product is available at prime + 1. Lucky buggers who got it at prime (sigh).

    So the argument that others have made holds, i.e. if you lock in a 5 year mortgage at 4% like today, your P+1 rate on All in one is lower. Why? because we are at historical lows. Those who are lucky will get 4% for 5 years. Those who go variable, who knows? this is the gamble, if inflation kicks in again like in 07, gas prices etc, and boc rate could go to 4 or 5, which may happen, then this product will be at 6 or 7%, so more than a current mortgage.

    The variable or floating rate loan is always a gamble, more importantly, the spreads between the bank`s cost of funds and a fixed mortgage are slimmer than with a variable product.

    But supposedly over the last 15 years, variable has on average produced better rates than fixed mortgages probably mainly because your chances of locking in a 5 year mortgage at a low rate each time are slim, so the variable rate smooths it out. (google Moshe Milevsky)

    Someone said you can get a mortgage below prime. You don’t mean bank prime right, which is 2.50 right now (BOC +1.5%), maybe you mean the loc prime, which is higher, usually at least 1%, +2% or more for unsecured. My ploc went to 5.25% from 4.25%, so P + 2.75%. This is above a 5 yr fixed and variable mortgage.

    Please explain what you mean when you say mortgage at P – 0.85%, with an example.

    Thanks for comments.

  • Engineer August 26, 2009, 7:40 pm

    I posted this in another post but I think it is better placed here. Sorry for the duplicity.

    What do people think about National Bank All in One Right Now?
    I have read the posts that follow and some of them are older, it seems the product has changed somewhat.

    I am able to get the LOC portion at prime+0% because I am an engineer so that part is attractive (haven’t been able to get this low anywhere else).

    We are also able to put the entire mortgage under the LOC portion and only pay prime+0 on that too. Option to lock in at any time.

    What do people think of the product currently? We are looking at it in terms of the Smith Manouvre

  • Jungle April 25, 2010, 9:03 pm

    I think the product has changed and you can now get a mortgage and HELOC in the All In One.

  • sharp21 May 27, 2011, 2:29 am

    I was just offered Prime – 0.71% on the mortgage & +.5% on the Heloc. So there definitely is a mortgage attached to it now.

    With the changes to the account it would be great if it was re-evaluated by the pros!

    S.

  • Canadian Mortgage May 27, 2011, 2:50 am

    Hi Sharp21,

    You’re absolutely right. National Bank’s All-in-One can be had with one or more mortgage components (if you want a hybrid mortgage), in addition to up to 99 HELOC accounts.

    The All-in-One was relaunched in April 2008 and the new version addressed all the key issues with the old version. Here’s a piece we did on it a while back: http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2008/04/all-in-one-redo.html

    Cheers,
    Rob

  • sharp21 May 28, 2011, 2:45 am

    Thanks Rob, that was a great article.

    You just made my mind up for me!

    S.

  • Sergey October 15, 2011, 2:56 pm

    Could someone explain how to properly set up AIO for personal and investment use.
    Here is my situation:

    I have $240k available in AIO. Interest rate is 3%. I’m buying a rental property shortly. The downpayment required is $50k, which I plan to borrow from my AIO. I want to be able to track the investment expenses and claim the interest on the borrowed money from AIO. In addition, I want to use the portion of the LOC for my personal use.

    Last week I opened a sub-account to track the investment expenses and the interest.

    Today, I transfered $50k from my personal LOC account to the investment sub-account for the downpayment. My personal account shows -$50k, and my sub-account +$50k.

    Since the personal account is in negative, that’s where the interest will be charged, is it correct? If so, I don’t understand what I gained exactly.

    It’s probably something simple that I’m missing…
    Please help.

  • ottawaguy September 16, 2015, 10:47 pm

    I am surprised there is no discussion about National Bank’s latest fee charge to AIO.
    Now it charges $6 for main account plus $6 for each sub-accounts. Any other better alternatives? How to switch?

    • Tdub September 15, 2016, 7:04 pm

      +1 on the new charges in the AIO. I haven’t been paying attention because I don’t use the LOC right now, but I happened to flip over the monthly statement this month and noticed I’ve racked up a -$90 amount in the LOC. The $6 a month charge was added and it’s been accumulating! I don’t recall even seeing notice of this charge, but NB says they sent out notifications 3x. Frustrating to see a “rainy day account” have a monthly fee attached to it now.

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