All-In-One Mortgage

The Swiss Army knife of financial operations, an all-in-one mortgage puts together aspects of three popular financial products: a mortgage, a home equity loan and a bank account. The all-in-one provides the liquidity of a bank account (meaning the customer can always get at their money), while allowing them to pay down their mortgage as fast as possible.

Basically, when you deposit money into the all-in-one, those dollars go to pay down the mortgage. However, if you need to take money out (you can still use things like ATMs and automatic bill pay) that money is returned to you in the form of a home equity loan.

The background machinations are a little complicated, but from the customer's point of view, the money in your bank account (which usually earns a fraction of a percentage point of interest) can now be used to pay down the mortgage, potentially shortening the period of the loan and lowering the overall amount that will have to be spent over the life of the mortgage. But, unlike a traditional mortgage (where the bank keeps any prepayment), you still have access to the money put into the all-in-one.

For this privilege, the bank usually gets an annual fee on top of the normal interest payments. Also, the interest rate typically tops that of a traditional mortgage.