![]() Personal loans generally have fixed-rates dependent on your credit score and history and offer another option for new or unanticipated events, as many home improvement projects turn out to be. Be aware that these loans may have closing costs associated with them just as a mortgage does.Īdvantages of home equity loans for spa finance typically include lower interest rates as compared to credit cards and other loan types (since they’re closer to actual mortgage rates), longer terms like mortgages, and the ability to borrow greater sums as long as you have the equity to cover it.Ī personal loan is simply money borrowed from a lender that’s repaid with interest in monthly installments over a set time period without anything but your credit to secure it. But as you’d guess, this is a more conventional loan with a fixed funding amount that’s repaid in equal monthly installments over a set period of time.Īgain, good for intermittent needs like home improvement project, a home equity loan acts much like a second mortgage with similar rates and can be secured through your mortgage lender as well as other lenders, banks, or credit unions. How are home equity loans different from home equity lines of credit? Home equity loans are similar to HELOCs in that you’re still using equity in the home as collateral to secure the loan. The process is similar to getting a mortgage–the lender will want to know your employment and income details and current recurring expenses, along with the value of and equity in your home. To get a HELOC, you apply through your home mortgage lender. The upfront costs are typically low and some HELOCs can be converted into fixed-rate loans if your improvement project becomes grander in scheme. These lines of credit allow you to draw and pay interest only on the amount you use and the interest is tax deductible. ![]() HELOCs are ideal for helping fund home improvement projects that come up, like adding a place to relax, rejuvenate, and unplug in your backyard. ![]() It’s important to identify both so you know when interest is accruing and how long you have to spread out the costs of your purchase. There are two time-frames to be aware of with HELOCs: the draw period when funds from the loan are available for withdrawal and the repayment period when the draws taken must be repaid. Since the balance on a HELOC can vary from day to day, the interest is calculated daily instead of monthly. Offered by your lender, the HELOC uses equity in the home as collateral and can serve as a type of second mortgage. It’s set up as a revolving line of credit for a stated maximum amount you can draw from or up to, rather than giving you a fixed dollar amount from the outset. What is a HELOC and how does it work? A home equity line of credit is essentially a loan that functions like a credit card. ![]() These include home equity lines of credit (HELOCs), home equity loans, personal loans, and spa financing through your spa dealer. Just as you would with a car purchase, it’s helpful when purchasing a spa to look at all the payment alternatives and ensure you’re making a smart choice for your own personal finances. And of course, financing avoids depleting your checking or savings account.When financing and spreading out the costs over time, you can feel good about including your preferred features and accessories rather than settling for less.Financing makes your larger ticket purchase affordable.Let’s take a quick look at the benefits to financing your spa purchase. And credit cards typically come with hefty finance rates hovering around 20%. Not everyone has or is comfortable using a chunk of cash from their checking account to pay for a larger ticket item all at once. When it comes time to pay for your spa, it helps to know there are hot tub financing options beyond cash and credit.
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