What is an All in One Loan and is it right for You?

An “offset mortgage” also known as an “all-in-one loan” is basically a 30-year home equity line of credit that includes a sweep-checking account where the deposits go directly to paying the principal balance. Homeowners can still access the funds they deposit (and their home equity) from the account, using it to pay their day-to-day bills, vacations, home improvements, whatever the credit line has available. It is essentially a “normal” checking account. Having your paychecks go directly towards the principal balance dramatically reduces the interest paid overtime compared to a traditional 30-year fixed mortgage where the interest is amortized over 30 years. With the offset mortgage, the loan is re-amoritzed daily based on the lower principal balance which reduces the amount of interest paid overtime. It also works great for second homes, which currently have almost the same interest rates as an investment property if you’re using a conventional mortgage.

This program is also available for investment properties. With an investment property, you can apply the rental income towards the principal and you can own up to 20 properties!

This program can be used when purchasing or refinancing a home. I really like this mortgage as I think it’s a great option for those who may be considering a home equity line of credit and it could be an alternative for someone who might be considering reverse mortgage.

Homeowners have access to their home equity and can dramatically reduce the interest they pay on their mortgage when compared to traditional mortgages. Not everyone will qualify for this type of mortgage.

You typically need strong reserves (savings), good credit with a minimum 720 credit score; and some home equity (up to a 90% loan to value for a primary residence). I’m told it’s often the last mortgage that people obtain as they no longer need to refi… as much as I love my clients to return, I’d much rather have them using a mortgage that works for them.

Please check out the calculator on this page. You can enter in your personal information to get a hands on idea of how "offset" mortgages work and if this is something that works for you. I recommend reviewing your most recent bank statements to gather your current monthly deposits and to see what you're spending. Monthly deposits are applied to paying off the principal of the mortgage and the mortgage balance is reamortized. The interest portion of your payment is determined by the average balance of the bank account each month. With the principal being paid down first, the balance is reduced much faster than a traditional mortgage.

If you would like to learn more, I’m happy to provide you with some numbers based on your financial scenario. It’s definitely worth considering or at least comparing to a traditional mortgage so you can weigh out your options.

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