Q: We have decided to get a pool put in the backyard, but we don’t have enough money saved in cash to pay for it. What are our options to fund the pool?
A: Using your own money is always the cheapest way to pay for something, so even if you have some cash that isn’t needed for anything else, consider using it to reduce how much you borrow. It will mean you pay less interest, which ultimately brings down the total cost of your pool.
There are a few other options to pay for your pool.
Refinance your home loan
You can think about refinancing, and if you manage to get a lower interest rate it might mean you don’t end up with repayments that are too much higher. There are costs involved in refinancing, so make sure you do your research or get some expert advice.
- If you pay it off as quickly as you would a personal loan you’ll save money
- You should be able to get a lower interest rate than a personal loan
- It may be easier to borrow a larger amount of money than through other options
- It could take longer to get the money through a refinance than some of your other options
- If you only make the minimum repayments you will stretch the loan out and end up paying more over the life of the loan
- A refinance will cost you money up front
- It may cost you expensive Lenders Mortgage Insurance if you borrow more than 80% of your home’s value
Our free Home Loan Refinancing Guide will tell you what’s involved with refinancing your home loan.
If you’re happy with your loan and lender, and have been making the most of the current low interest rate environment by making extra repayments you may be able to redraw that money back out.
- Quicker access to the money
- You’re essentially using your own savings
- Not all loans have a redraw option
- Some lenders charge redraw fees
- A redraw will increase your loan balance meaning you will pay more interest on your loan
- Repayments will be spread over the remaining loan term which may mean a higher total interest bill for you (remember that most mortgages run for 25-30 years)
A personal loan might be a quicker and easier way to get funds for your pool, with structured repayments to suit your budget.
- Faster application, approval and access to funds
- Shorter repayment time means you’re cleared of debt sooner
- Total interest paid may be lower because the term of the loan is shorter
- There are limitations on what renovations can be completed
- Over the same time-frame you may pay more interest with a personal loan than a home loan
- You will be charged an application fee
Have you recently put in a pool? How did you finance it?
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