National Bank All-in-One – Mortgage of the Year

National-Bank Thanks to the credit crisis, lenders cut more products in 2008 than they launched.  But one lender stood out, unveiling what would become the year’s best new mortgage. 

In April 2008, National Bank re-launched its All-in-One mortgage/HELOC.  The new version fixed some nagging problems with the old All-in-One and made it the product to beat.

The All-in-One is now the only mortgage/HELOC in Canada with each of the following:

  • A line of credit that is linked to your mortgage
  • Interest cancellation (Positive chequing/savings balances offset your line of credit balance to save interest)
  • An immediate and automatic increase in your available credit line as you pay down your mortgage
  • The ability to choose multiple terms and rates for interest rate diversification (e.g.  a 5-year variable, a 5-year fixed, and an open HELOC—all in the same mortgage.)
  • Optional interest-only payments
  • Up to 99 line of credit sub-accounts (for segregating borrowing to track interest and balances separately)
  • Chequing privileges in each sub-account
  • A consolidated monthly banking/mortgage statement with online access and free online banking

In sum, we wish to congratulate National Bank for an excellent overall product—and the 2nd annual CMT Mortgage of the Year. 

Hopefully more lenders will be inspired to offer innovative products of their own in 2009.

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For more information…

  1. As a side note, we really love this product. Like all mortgages, however, there are things we wish we could change. The biggest gripes we hear about it:
    * Strict qualification standards. National requires a 670 Beacon, a 25-year amortization to qualify, and a high qualification rate (3-year posted). This gives a huge edge to lenders like Canadian Tire who let you qualify on 3-year discounted rates and a 35-year amortization.
    * The down payment. You need 20% down to get a HELOC nowadays.
    * No rate guarantee. HELOC rates are not pinned to prime like regular variable-rate mortgages.
    * The rate itself. A few months ago, National had the best variable rate in the market. Now it’s not so hot, and Canadian Tire and Manulife have the advantage. National will most likely lower it’s rates again in 2009, however, so stay tuned.
    * Interest cancellation doesn’t apply to the debt in locked-in portions, only to debt in the line of credit portion.
    Despite these issues the All-in-One is still the most flexible mortgage product in the market for well qualified applicants, by far.

  2. Please let us know how many deals you funded with National Bank in 2008 vs. the number you funded with the other lenders that had offered a similar product-Manulife, Merix, Scotia-step, etc. You receive a fee from this company for funding a deal with them, without knowing how many you funded with them vs. there competitor’s how are we to know whether or not your opinion is objective?

  3. How many did of these products did you fund last year as a broker/agent with National Bank vs. with the competition Canadian Tire, Manulife, Merix, Scotia–realizing some are not open to broker channels, how many did you refer out also. We can not see your view as being objective unless we know what you funded with National Bank vs. the others. As you also agreed to in a different post, being an issue in the future for brokers to be FSCO compliant.

  4. Hi Objective,
    Thanks for the post. It’s very reasonable, and advisable, to ask a broker what ratio of mortgages they’ve funded with different lenders. I’ll touch on our ratios below but regular readers are well aware that this site regularly promotes a wide variety of lenders. This includes lenders who don’t compensate brokers and lenders we don’t do a lot of business with.
    Regarding lender funding amounts, mortgage planners may not always know their exact stats but they should at least be able to break them down in approximate terms. It’s important to note that there are various reasons why a broker will use one lender more than others:
    * A broker will naturally fund more with a particular lender if that lender has the best overall product(s).
    * A broker will fund more with a lender if that broker specializes in a particular niche (e.g. rental properties, Smith Manoeuvre mortgages, liquidity planning, vacation properties, new immigrant financing, etc.)
    * Some people fund more with lenders that offer incentives (Incentives are not always in the best interests of clients so we’d love to see this practice changed.)
    * A broker will fund more with lenders that offer superior service and turnaround times (Very few lenders offer truly exceptional service and the ones that do are generally more popular)
    In our case, we don’t track exact percentages because we’ve never had a need to until now. Some people are very hung up on lender volumes because they’re trying to reach certain status levels. We simply recommend whichever lender has the best pricing and product for the client.
    Here are the top 10 lenders that we’ve referred notable volumes to in the last few years. I’ve tried to order it by memory based on the biggest volumes first. The asterisks represent lenders that pay brokers.
    –> Scotia*
    –> FirstLine*
    –> MyNext*
    –> First National*
    –> National Bank*
    –> Canadian Tire
    –> RBC
    –> MCAP*
    –> First Ontario CU*
    –> Merix*
    –> Other broker and non-broker lenders whenever they have the best deals including, but not limited to, ING, Xceed, BMO, Desjardins, TD, Macquarie, Street Capital, various credit unions, etc.
    Probably no single lender accounts for over 20% of our volume.
    In any event, hopefully this helps clarify our motivations.
    Cheers,
    Rob

  5. The downside to National’s All In One for new clients right now is the rate (Prime plus 1%). Anyone that takes this product right now will always have to pay Prime plus 1%.
    This makes Manulife’s and Canadian Tire’s products much better since their rates are not registered as “prime plus 1%.”
    Manulife can’t hold a candle to Canadian Tire right now as the Manulife One is 3/4 above Prime (plus a monthly fee) and Canadian Tire’s One & Only account is at Prime (and no monthly fee).
    As you suggested though, National’s AIO may revert back to Prime in the future.

  6. Hi Pete,
    Totally agree with you that, at this moment, the rate differential makes Canadian Tire a better option for people who will have a large balance in the adjustable-rate line of credit.
    For people wanting a fixed rate, multiple sub-accounts, or a capped variable rate, the All-in-One is still very competitive.
    In November National had the same HELOC rate as CT but they were getting so much business they couldn’t keep up. As a result they probably had no choice but to raise their rate. Fortunately National was good enough to not raise rates on existing clients. Manulife did this with disastrous PR implications, although I don’t know enough about Manulife’s reasons to fault them for it.
    Rob

  7. It is unfortunate that Canadian Tires One and Only has only one LOC account. Because of this it is impossible to have your mortgage at prime and also borrow to invest or use the cash flow dam.

  8. National Bank rates are out of line also they over-conditon deals, which is a bi-product of having there underwriting done in Montreal, in case you did not know the Brampton office where broker deals are completed–NO one has underwriting limits including the Managers, all MUST be approved in Montreal, hence sometimes you get some weird conditions on files. Brampton office are therefore just paper pushers.

  9. FWIW we have been very happy with our all in one. We got lucky though because our rate is prime minus 6/10%. I am not sure we would have got it, or any variable mortgage, if the rate was prime plus 1%!!

  10. I have had an all-in-one with National Bank since December. Got mine at prime (prime+0%) before they raised it for new customers. Can they actually raise the rate, if all of our mortgage and legal documents reference prime + 0%?
    Overall, happy with the product’s flexibility. If I lose my job, I would just pay the interest payments until I get a new job, instead of not being able to pay regular full payments under a conventional mortgage. And I like the fact that I don’t have to ever go in to renegotiate a mortgage again, unless the prime rate rises to a ridiculous amount. Happy paying the 2.5% at this moment!

  11. Can you please tell me does it affect my
    credit rating for getting National Bank all in one for SM ?
    How does it compare to Firstline Matrix
    towards keeping credit clean.
    Please comment

  12. As far as I know, all lenders except FirstLine report credit lines to the credit bureaus. I have seen scores go down several points if the credit line is fully used.

  13. No one seems to talk about the NBC changes to AIO by charging $6.00 for main account and then another $6.00 for each sub-account. Any other better alternative out there? You seems to talk about MCAP’s fusion product.

    1. Hi Kuldip,

      This story was written before the $6 charge was implemented. It’s a very annoying fee that will absolutely cost NBC business.

      Other all-in-one type HELOCs are Desjardin’s Versatile Line of Credit in ON, QC, NB and Envision’s RedFrog in BC. Manulife’s One is solid as well but it has the biggest fee of them all.

      Of course, there are also plenty of no-fee readvanceable HELOCs without full banking: Scotia’s STEP, MCAP’s Fusion, RBC’s Homeline, BMO’s ReadiLine, etc…

      1. I’ve been trying to cancel the Heloc portion of this product since I noticed the $6 fee. NBC call centre advised to go in to branch an pay about $20 to ensure outstanding amount covered. I did this in September – was assured by branch no further fees would be incurred. Just got my statement for October and fees are continuing. Branch is scrambling to find out what’s going on. Call Centre has no record of closing account…my online banking statement has a memo in September with the amount I paid in cash and stating payment for account closure. Today at the branch the teller suggested they be no way to actually get out of this product (and paying the monthly fees for something I don’t use) WITHOUT re-applying for another mortgage. Bottom line is I feel lured in by a mortgage broker, but not am locked into monthly fees for something I don’t use. Escalations to managers don’t seem to bother them (they must get much more out of the $6 fees). I don’t even recall getting a notification (that clearly stated the fee would come). Even if I did, it would not have mattered, NBC trapped me with a great sounding product 2 years ago…then they added the fee knowing most people won’t go through the process of applying for another mortgage. Hopefully they don’t increase the fee again…although based on my experience I wouldn’t be surprised…maybe a $20 per month fee will push me to reapply for mortgage somewhere else. Lesson learned for me…if it sounds too good to be true, it sure is!

        1. Hi Alex,

          A lot of customers think brokers deceived them by recommending National Bank’s All-in-One because, in part, it had no monthly fee.

          That’s how the bank sold the product to brokers for the longest time. And then, almost overnight, it made brokers look bad and alienated thousands of existing customers with this $6 charge. The fee never should have been imposed on existing clients, or at the very least, not until their maturity dates.

          It was very poorly executed by the bank and I feel your frustration…

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