What is an All-In-One Mortgage?

An all-in-one mortgage is a loan that allows for the combination of mortgage and savings by borrowers. This type of loan reduces the interest payment that borrowers make on their mortgage but also ties the home loan to the savings of borrowers. An all-in-one mortgage offers consumers their home loans (mortgage) and savings in one package. This type of mortgage requires the combination of a checking account and a home equity loan.

Back to: BANKING, LENDING, & CREDIT INDUSTRY

How Does an All-In-One Mortgage Work?

An all-in-one mortgage allows borrowers to deposit money into their savings account, while payments made into this account are channeled towards paying the mortgage, account owners can also access the remaining balance for withdrawal. Since an all-in-one mortgage ties, the home loan obtained by the borrower to their savings, deposits are used to pay down the principal. Although old-fashioned, an all-in-one mortgage functions like a home equity line of credit (HELOC) or an offset mortgage. In its new form, an all-in-one mortgage combines a first mortgage and HELOC as a single mortgage. All-in-one mortgages have lower interests and reduce fees that borrowers could have incurred in the process of refinancing. Homeowners can access the balance in their equity in an all-in-one mortgage through the transfer of the balance to a traditional savings or checking account as the case may be. They can also write a check directly from the account.

Drawbacks of All-in-One mortgage

Despite that an all-in-one mortgage offers reduced interest rates and eliminates certain fees associated with refinancing, it has some drawbacks. This type of loan also offers borrowers a simplified filing process. The major drawbacks of an all-in-one mortgage are that a homeowner has endless access to draw on equity as it builds up, without fully paying off their mortgage.

What is a Mortgage Refinancing?

Mortgage refinancing is a method through which homeowners change the terms on their existing loan by taking another mortgage. Several reasons are responsible for a mortgage refinancing but the major ones include benefitting from lower interest rates, to remove a partner from the home and others. To do mortgage refinancing, a homeowner must have their income reviewed to access their credit quality (rating) and whether it matches the changes they want to make on the existing mortgage. The review will be done by a mortgage broker or a loan agent. Mortgage refinancing also requires paperwork, but not as must as the first mortgage.