Loan options for building a backyard pool

Personal Loans »

Don TaylorDear Dr. Don,
We plan to build a swimming pool for our house in the coming year. As for how to pay for it, we are considering whether to save the money, which should take about a year, or get a home equity line of credit or second mortgage and take a tax deduction on the interest expense.

We make about $175,000 per year and have no real debt, other than our home. Unfortunately, we do not have many deductions other than 2 children and filing as married filing jointly.

-- James Jumpin'

Building a pool in the backyard © iStock

Dear James,
Ah, I don't get too many questions about swimming pools, so let's jump right in. I mean, let's try to help you to get the job done. Sorry, I couldn't resist.

If you've decided that you want to have a pool, then why sit out a season while you save for it? If you can get the pool installed and have it available this season, that's what I'd recommend.

Saving over the next year

By your estimate, you can save the money over a year's time, so you can pay off the loan with only a year's interest expense. If pool prices jump by more than the interest expense over the following year, you've lost both a season in the pool and the savings.

Financing the project

How to finance the pool depends on the interest rate on your existing mortgage, the equity in your home and how long you expect to be in the house. A cash-out refinancing makes sense if it cuts the interest rate on your existing mortgage but carries higher closing costs than a home equity loan or line of credit.

Another option is a personal loan. You'll want to check your credit score, because lenders generally require those seeking a personal loan to have a higher credit rating. if you're a worthwhile candidate for a personal loan, compare rates and added costs on personal loans with other options.

If you're looking for a personal loan, check out the range of offers on

With a plan to repay the debt quickly, you might be better off with one of the loans. Make sure you understand any prepayment penalties connected to the home equity line or loan.

If the mortgage interest deduction just replaces the standard deduction on your taxes, then it's not really helping you on tax savings. Take the plunge and let us know whether the water is fine.

Personal loans are widely used to finance a pool. Check your rates today.

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.

Ask the adviser

To ask a question of Dr. Don, go to the "Ask the Experts" page and select one of these topics: "Financing a home," "Saving & Investing" or "Money." Read more Dr. Don columns for additional personal finance advice.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.


Show Bankrate's community sharing policy
          Connect with us

Debt Adviser

Don't be seduced by this debt plan

Dear Debt Adviser, I have about $50,000 of debt on credit cards. My credit rating is still high. I am thinking about a debt consolidation loan. Will that adversely affect my credit rating? -- DT Dear DT, The cliche... Read more


Connect with us