Paul has just been woken up at 7 AM by the noisy machines digging his neighbor’s new pool. Curious by nature, Paul goes to speak with his neighbor, Robert, busy surveying the work. Paul learns that the pool will cost $35,000 for which Robert will only be paying $185/month.  What!? The last time Paul looked into buying a pool, the payment was $676/month. Why such a big difference?

In this case, Robert’s $35,000 pool was financed with his 25-year mortgage at a rate of 4%*, whereas John’s $676 monthly payment would have come from a 5-year personal loan at 6% interest.

However, is it a good idea to finance an in-ground pool over 25 years? It’s pretty hard to answer this question. Some will say it is a bad idea to pay interest for 25 years on money for a pool, whereas others will say the pool will increase the value of the home and that life-span of the pool is at least 25 years.

Regardless of whether you finance it for 5 years or 25 years, using your mortgage to finance projects is usually advantageous because you save on the interest rate as well. In effect, a personal loan costs between 5%-10% while mortgage rates are currently between 2.29%-5.00%.

Have you been dreaming about a beautiful pool for a long time?  Go ahead, dive in!

For more information regarding mortgage loans and how to finance various projects, do not hesitate to contact us!

*average rate.