Who wouldn’t like to unwind in their own hot tub or jacuzzi after a hard day? A hot tub is often considered a luxury that can be afforded by only the elite. However, with some smart financial planning, you can get yourself the luxury of a hot tub without breaking your bank.
There are various options available through which you can finance your dream hot tub. We will discuss the nitty-gritty of hot tub financing in this article. If you are looking for cost-effective options, visit this site.
Cost of a hot tub in Canada?
Before jumping into finance options, you need to define the amount you need. The cost of installing a hot tub in Canada depends on a lot of factors, such as:
The type of hot tub you choose – wooden, vinyl, or the fancy ones with lights, holders, etc. The average cost can range from $8000 to $12000. High-end tubs can cost you as high as $20000.
The installation and transportation cost also forms a significant part of the overall costs. If you are installing an outdoor tub, you need to ensure that you have a wooden or concrete platform to install the tub on. If you don’t, constructing one would be indispensable and would add to the costs.
On the other hand, indoor tubs would also require some restructuring – waterproofing, ventilation, humidity control, etc. People tend to overlook these auxiliary costs, which can range anywhere between $1000-2000.
Moreover, the actual installation costs can be anywhere between $375-900.
Thus, the overall costs can range from $13000-15000. If you choose a more luxurious hot tub, you can end up paying around $22000-25000.
Here is how you can finance your hot tub
here are various options for financing your next hot tub project
Home equity loans
Using the equity in your home to finance any home improvements is a sound financial practice, and you can use the equity in your home to boost your home’s value.
Most lenders offer home equity loans at rates lower than other financing options. This is because your loan facility is secured by your home. Thus, the risk assumed by your lender reduces, resulting in lower rates. Moreover, if you have a good credit score, you can end up securing a much lower interest.
Lenders calculate the equity in your home after subtracting any existing mortgages or obligations from its market value. 70-80% of this amount is offered by lenders as a loan. This is popularly known as loan-to-value.
Many people fear losing their homes in case of a home equity loan. However, that is possible when you take out a sizable sum against your property. However, you would not need to take out a large sum when you finance a hot tub. Therefore the risk of losing your property is less.
The basis of a HELOC is also similar to a home equity loan – the credit is offered on the basis of your home’s value. However, unlike a home equity loan, the entire amount is not disbursed in a lump sum. Instead, the lender creates a line of credit with a maximum limit. You can use this as and when required.
For example, You might have a line of credit of $50000, and you might use only $20000 for hot tub installation. You still have $30000 available, which can be used for any other significant expense. Interest will be charged only on the amount actually used.
Moreover, when you repay the amount used, your limit will be revived by the repayment amount. Thus, it works exactly like a credit card.
If you do not have enough equity in your home, you can take out a personal loan. These loans are available in two broad forms – secured or unsecured. In case you offer an asset to secure your loan facility, you can benefit from a lower rate of interest. However, an unsecured personal loan would cost you more.
Moreover, your credit score has a crucial role to play while securing a personal loan. Individuals with high credit scores are viewed as low-risk clients. If you have a clean credit history with no defaults, you can secure competitive rates. On the flip side, a lousy credit record will only dent your capacity to bargain.
The credit card market has become very competitive. This has led to several opportunities for Canadian homeowners. Credit card providers offer an interest-free period ranging from 12 to 18 months. You can use this opportunity to finance your next hot tub project. You can take out a sizable sum without having to pay any interest. Moreover, since the size of the sum isn’t too large, you can pay it off within the interest-free period itself. This way, you wouldn’t have to pay any interest on the entire borrowed sum.
There is no better freedom than to use cash to make a hefty purchase. If you do not have enough alternatives to investing your available liquid funds, you can use them to finance your hot tub project. Let us understand this with the help of an example.
Suppose you have a liquid fund of $20000. You can invest it to earn a return of 6% in a year and take out a loan for your hot tub at 8%. In this case, you would be paying a net interest of 2%. However, if you use the cash to finance the purchase, you would not have to pay any interest. Therefore as long as your rate of interest on the loan is more than what you can earn by investing idle cash, using ideal gas to finance the purchase is the best option.
You now know the various options you can look at while thinking of getting yourself a hot tub. You need to look at your current financial position before choosing an option. Make sure that the alternative you choose does not put an unnecessary burden on your overall financial liability.
If necessary, do not hesitate to contact a financial professional who can help you sort your finances and make an ideal choice.