Understanding the All-In-One (AIO) Mortgage
If you are looking to pay off your mortgage faster, the All-In-One (AIO) mortgage—also known as an offset mortgage or a Manulife One account—offers a powerful alternative to traditional banking. This calculator is designed to help homeowners project exactly how cash flow impacts their principal balance over time.
What is an Offset Mortgage?
Unlike a traditional mortgage where your cash sits idle in a checking account earning negligible interest while you pay high interest on your home loan, an offset mortgage combines your borrowing and banking into a single account. Every dollar deposited into the account immediately reduces the principal balance, which in turn reduces the daily interest calculated.
How is Daily Interest Calculated?
Traditional fixed-rate mortgages in Canada calculate interest semi-annually, regardless of your payment frequency. An AIO mortgage calculates interest daily based on your closing balance, and capitalizes (charges) that interest to your account on the last day of the month. By keeping your cash inside the mortgage account for as long as possible before paying bills, you minimize your daily principal and drive down your total interest costs.
Traditional vs AIO: Which is better?
The efficiency of an All-In-One mortgage relies heavily on positive cash flow. Homeowners who consistently earn more than they spend, or who receive large, irregular bonuses, will see massive savings and timeline reductions. Use our free interactive simulator above to map your exact monthly budget and see which strategy mathematically wins for your specific lifestyle.