As Canadians juggle their financial priorities these days, they’re navigating challenges such as rising costs, mortgage renewals with higher interest rates, and ongoing economic uncertainty. In turn, advisors are also challenged to help clients be in a better position to pursue the goals they’ve planned for together.
The right banking solution can be part of staying agile, says Jenn Ruso, vice-president and head of residential lending at Manulife Bank.
“[Clients] want a solution for better cash flow, easier access to credit facilities and an advantaged path to paying off debt more quickly all in one spot.”
To better address all these needs, Manulife Bank provides a Swiss Army knife financial tool. Manulife One is a hybrid product that’s part daily banking account, part mortgage and part line of credit. The product is backed by one of the most foundational assets for Canadians’ wealth: their homes.
Jenn Ruso, vice-president and head of residential lending, Manulife Bank
“Manulife One is really a strategic solution,” Ms. Ruso says. “It’s not like other mortgage products in the marketplace because it’s uniquely positioned to calculate interest [on a] daily [basis], and has full service transactional abilities, allowing clients to deposit funds directly to the main account, which can operate like a line of credit or chequing account.
Simply put, every dollar deposited to the main account immediately reduces the debt owing. Because interest is calculated daily, deposits immediately reduce the interest owed at the end of the month. “Over time, that can save a tremendous amount in interest costs, but it also provides flexibility around payments,” she says.
That’s a benefit for anyone, and can be especially appealing to clients who get paid in lump sums rather than regular salaries, Ms. Ruso says, pointing to self-employed individuals and entrepreneurs. The only limitation is the total liability in the account cannot exceed 80 per cent of the home’s value.
The flexibility also affords more efficient financial management. With many banking needs covered in one account, clients don’t have to manage different payment schedules and move money from one account to another. Clients can manage up to five amortizing sub-accounts and up to 15 tracking sub-accounts, with variable or fixed rates.
Each month, clients can adjust the amount they pay down, reducing principal more in months with higher income, while still having access to home equity during months with lower income.
Manulife Bank isn’t a traditional bank. So, its flagship product is accessible through the mortgage broker channel, or through a referral from the network of independent financial advisors who partner with Manulife. These professionals play a vital role determining whether Manulife One suits clients’ needs.
“Clients must not only have a need for the product; they also must have financial discipline to ensure they’re not overspending consistently. Without that discipline, the product may not deliver its intended benefits,” Ms. Ruso says.
As a backstop, all clients must qualify through a mortgage specialist or a licenced mortgage broker to ensure suitability, she adds.
Financial advisors and mortgage brokers are always seeking ways to help their clients prepare for disruption and still be positioned to achieve financial well being and seize new opportunities. With Manulife One, a client’s income and savings can work harder for them.
Manulife One is best suited for clients who’ve owned their home a few years and are building net worth consistently. For them, Manulife One could be a tool that enhances growth, using tax-efficient, wealth-building strategies. For example, entrepreneurs can finance the purchase of a business property using a subaccount to track interest costs as a deductible expense.
The financial flexibility and cash-flow optimization are both crucial in helping clients be in a position to invest or create a buffer against downturns without taking on additional loans or cashing out their investments.
For example, high-net-worth (HNW) clients might use their available borrowing room to top-up their RRSPs and other investments, or avoid sequence of return risk during market downturns when they reach retirement age. Clients who are comfortable with market risk can also create a subaccount to borrow to invest while also deducting interest costs.
As another example, families seeking a vacation property can use Manulife One to provide liquidity for the down payment.
For qualifying clients with significant equity, Manulife One can help tap into primary home’s equity for purchasing investment properties. HNW clients may also want to assist their children with education expenses or buying their first home. Manulife One could allow them to support others financially while keeping their retirement savings intact.
During the past 30 years, Ms. Ruso notes that Manulife Bank’s support team has partnered with advisors and worked with tens of thousands of Canadians to help them pay down debt and grow wealth faster using Manulife One.
“It’s really about optimizing Canadians’ path to their goals, with their advisors helping them understand Manulife One’s potential to reach those goals more quickly.”
Learn more about how Manulife One can help your clients to save and to simplify their finances.
Advertising feature produced by Globe Content Studio with Manulife Bank of Canada. The Globe’s editorial department was not involved.
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