All in one loans

All in One loans act as a combined mortgage, savings and cheque account. You have a central loan or mortgage account into which your salary and any other cash payments are deposited. The extra cash in your account reduces the principal amount owing and thereby the amount of interest charged. You then access the funds you have left over and above the minimum monthly repayment amount to pay monthly expenses.

These accounts often have a credit card linked to them, with the balance owing on the card at the end of each month being drawn down from the all-in-one account. Standard transactions such as ATM withdrawals and direct debits are also managed through the account so that many borrowers will not need another bank account. This can be an effective way of using the interest-free period on your credit card each month.

If you are considering an All in One Loan, you should also look at 100% Offset Loan products.

In terms of the All in One Loans,

Advantages:

• Can result in interest savings if borrower is disciplined
• May be tax effective
• Flexible

Disadvantages:

• May have a higher interest rate than other products