Thinking About Pool Finance

If you are like the majority of swimming pool buyers, you probably need a little help from a financial institution to make it all possible. The following notes may be helpful to your consideration of this important matter.

Spending or Investing?

It is important to realise that you are not planning to spend money on a consumer product. Most consumer products devalue as soon as you walk out of the shop and continue to do so throughout their lives. Not so with a new swimming pool. You will be investing in additional assets.

Adding to your Assets

The pool you are about to acquire will greatly increase the value of your home, an increase which will be realised whenever you sell your property. Alternatively the increased value of your home will allow you to borrow more money against it if ever you wish to do so in future. Perhaps you will want to add a home extension, buy a business or borrow extra working capital for an existing business.

Your Best Pool Finance Option

In all probability the bank or other institution who holds a mortgage over your home will be the best source of new swimming pool finance. There are a number of good reasons why this would be the case. For example:

  • A new swimming pool will add value to the same asset which secures your existing mortgage. From your bank’s point of view this helps to justify a further advance, subject of course to normal bank guidelines.
  • Because your existing lender already holds a mortgage over your property there is minimal fuss and minimal costs involved in a loan increase.
  • Your current lender already knows your track record and also knows a great deal about your various assets, liabilities and income sources. Provided your existing relationship is in good shape, this will help to fast track your extra loan application.
  • Because your home mortgage probably has many years to run, adding on to the original loan will spread the extra payment commitment over a long period thus making it much easier on your pocket.
  • In all probability, the interest rate on your mortgage will be far lower than that applicable to any Personal Loan or Second Mortgage financing, as well as being easier to arrange.

The Extra Commitment

If you will be borrowing some money to finance your new pool you will naturally be interested in knowing how much extra monthly commitment this might involve. As a very rough guideline, the table below will help give you a quick approximation depending on the amount you wish to borrow, your current interest rate and the remaining term of your mortgage.

The table assumes you would be paying off both interest AND principal. However there are other bank products which allow you to repay interest only and these result in a much lower monthly commitment. Figures below are very rough. Contact your lender for precise calculations.

Principal and Interest – Approx per month per $1,000 borrowed

Remaining Termif 6% interestif 8% interestif 10% interest
5 years $19$20$21
10 years $11$12$13
15 years $8$10$11
20 years $7$8$10
25 years $6$7$9