“This would be a much better world if more married couples were as deeply in love as they are in debt.” – Earl Wilson
I have to admit, I chuckled a little at the above quote from Earl Wilson. While humorous, debt can cause significant stress in relationships, leading to negative consequences. Debt, especially mortgages, has been a hot topic recently. Housing prices have skyrocketed, and an estimated 60% of Canadian mortgages are set to renew between 2024 and 2026[1], coming off historically low interest-rate terms. Many people are asking about rate choices and strategies for paying down debt in this new, higher interest-rate environment.
While we don’t have a crystal ball to predict interest rates, the key to successfully paying down your mortgage lies in living within your means and creating a spending plan that ensures enough money is directed towards your debt, so it’s paid off within your desired timeline. A simple amortization calculator can help you determine the required payments. However, many Canadians also carry credit card debt, consumer loans, auto loans, and other forms of credit in addition to their mortgage. This makes their debt complicated and inefficient, which can hinder repayment and make tracking progress difficult. It also likely means paying higher interest rates, as is often the case with credit cards.
But what if there was a better way to structure your mortgage and other debts? A way that would make it easier to track your progress, pay less interest, and accelerate debt repayment? What if this approach could be tailored to your individual needs and provide flexibility as your circumstances change?
In 2013, I completely overhauled my mortgage strategy after being introduced to Manulife Bank’s “Manulife One” mortgage. Eleven years and a move to a new house later, I haven’t regretted it for a moment and have recommended it to many others. Essentially, it combines a mortgage and a bank account into one. Every time a deposit is made, we save interest charges on the deposited amount effective immediately. We gradually borrow back a portion of our deposits as needed for daily living expenses and long-term investment commitments. Over time, the incremental interest savings from these deposits accumulate, resulting in substantial savings. We even have fixed-rate subaccounts to mitigate interest rate risks, similar to a traditional mortgage.
Here’s a quick two-minute animated video that explains how it works in more detail, followed by another video from an actual Manulife One client who has found success:
While our primary goal was to pay down our mortgage faster with lower interest costs, I’ve also seen firsthand how this structure has helped families through challenging situations, such as temporary job loss, and has allowed them to seize new opportunities when they arise. It’s designed to be incredibly flexible.
Here’s another video that provides further insights: Flexibility benefits
While this structure is likely a new concept for you, it sure has helped me. Families that are financially motivated to increase their wealth and, most importantly, keep track of their spending have been very successful. This is a fantastic opportunity to learn how this might work for you. If you have a mortgage renewing in the next year or so, please reach out to us for more information.
We will have you connected with a dedicated Mortgage Specialist. They can assist with this concept and a traditional way as well.
For further discovery, check out: Discover Manulife One
We look forward to speaking with you soon.
Best regards, ROB
Eric, Rob, Chris, Shiv, Kerry, Julie, Sara, Bev, Patti, Natasha, and Jen
[1] Bracing for Impact: Preparing for the Wave of Mortgage Renewals in Canada
