There are three lenders that provide \”All-in-one\” mortgages. These are like a traditional mortgage but they include a home equity line of credit (HELOC), and that HELOC typically grows over time at the same rate that you pay down your principal (not principal plus interest). This is useful for borrowers that want to maximize the amount that they can borrow in a short period of time, and are less interested in refinancing, possibly because they are in a market with lower property appreciation, such as Alberta in 2021. In Ontario, refinancing after 5 years would typically allow you to borrow much more than this HELOC would, because you may have paid down 3% of your mortgage owing, but your property would have appreciated say 25% to 35%.
The first thing you\’ll notice about these products is that the interest rate is higher – about 0.75% higher! On a half-million dollar property, that\’s roughly $3750 per year.
Ask yourself:
Is it really worth paying that premium to have a lower interest rate on your line of credit? Do the calculations and see if it\’s worthwhile.
What do you need to borrow more money for? If it\’s for investing, the higher interest rate may make all your HELOC-investing efforts much less fruitful.
An All-in-One Mortgage may be most suitable for the non-investor who is simply looking for a low-interest line of credit to spend on things other than investments.
References:
https://www.ratehub.ca/best-mortgage-rates/all-in-one
https://www.ratehub.ca/best-mortgage-rates
https://maplemoney.com/scotiabanks-scotia-total-equity-plan-step/