Home Improvement

What you need to know about financing your new swimming pool

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Adding a swimming pool to your backyard can boost your personal enjoyment of your home and your property values. However, you shouldn’t dive into pool ownership without careful thought — and some money to spend. In addition to their upfront cost, swimming pools require ongoing maintenance and care. The average cost for an above-ground pool is around $11,000, according to home improvement website Fixr, while an in-ground cool can cost $45,000 to $85,000 or more.

Even if you’re able to save money on materials or labor, a swimming pool is still a major investment, and you may want to consider financing it with a pool loan.

How does a pool loan work?

There are a few different ways to get a swimming pool loan. Once you figure out how much money you’ll need for your new swimming pool, you can shop around with a few lenders to find a loan that works best for you.

Once you are approved for the loan, you’ll typically receive all of your loan funds upfront. You’ll then repay the loan over a number of years with interest. Your income and FICO credit score will play major factors in determining the interest rate and monthly payment of your pool loan.

Factors to consider when financing a new swimming pool

Before you take out a personal loan or apply for any other pool financing product, there are a few factors that you should keep in mind:

  • Monthly payment. Consider speaking with a few pool contractors to get a ballpark estimate on your final price, then play around with a pool loan calculator to see how much your monthly payment may be. If you want to pay off your loan quickly, you’ll need to pay more each month. If you plan to spread your payments out over the long haul, on the other hand, you may be able to get away with paying a smaller monthly amount.
  • Repayment term. If you plan to stay put for decades or longer, you’ll need to consider the long-term costs of owning and operating a pool. If you plan to move in a few years, you should know that homes with a pool may be worth slightly more — but they may also appeal to a smaller group of buyers, since not everyone wants a pool in their backyard. You’ll likely also want to avoid a long loan term if you’re planning on selling your house in a few years.
  • Maintenance costs. A pool is expensive to maintain. In addition to the large upfront costs of a swimming pool, you’ll also need to add pool cleaning equipment, lighting and heating, a pool cover and other regular maintenance items into your budget.

4 best ways to finance your new pool

Due to the high initial investment required for a new pool, many homeowners opt to borrow money for the project and pay it off over time. Here are some of the best ways to finance your new swimming pool if you don’t have the cash to pay for it upfront.

Personal loan

The most popular option among pool loans is the tried-and-true personal loan. With a personal loan, you can borrow a lump sum at a fixed interest rate and with a fixed repayment period. This means you’ll be charged a regular monthly payment that will never change. Another benefit is that you’ll know exactly when you’ll become debt-free.

Personal loans are also unsecured, meaning you don’t have to put your home down as collateral to get approved. If you have very good or excellent credit — or any FICO score over 740 — you may even be able to qualify for a pool loan with a fixed interest rate as low as 5 percent. Personal loans also often come with low fees or no fees, making them a very inexpensive option when compared to other swimming pool loans.

Home equity loan

A home equity loan lets you borrow against the value of your home and use it as collateral, thus helping you secure a competitive interest rate. Home equity loans work like personal loans — they come with a fixed interest rate, a fixed repayment timeline and a fixed monthly payment that will never change.

Keep in mind that using your home as collateral does present some added risk. For example, your home will be subject to foreclosure if you stop making your home equity loan payment, which is not the case with personal loans. Also note that you can typically only borrow up to 85 percent of your home’s value minus any mortgage payments, so this option will only work for consumers who have a lot of untapped equity in their properties.

HELOC

A home equity line of credit (HELOC) is another way to finance a swimming pool, similar to a home equity loan. With a HELOC, however, you get access to a line of credit that you can borrow against as needed — typically with a variable interest rate. Since your rate may go up and down due to rate fluctuations in the market and the amount you borrow isn’t set in stone, your payment can also change throughout the life of the loan.

As with a home equity loan, using a HELOC to finance your swimming pool does come with a few disadvantages. A HELOC does use your home as collateral, meaning you risk foreclosure if you don’t make your payments. And you are also subject to the same equity limits, meaning a HELOC is only a good option for borrowers with significant amounts of home equity.

Swimming pool loan through the dealer

Another option to finance your swimming pool may be a loan through the dealer you use to purchase your swimming pool. If you do opt for dealer financing, make sure you carefully read the terms of what you are agreeing to, and be prepared to pay higher rates. Still, if you’re not able to qualify for a personal loan or financing using your home’s equity, this may be the only option for financing your swimming pool.

The bottom line

Having your own backyard pool may seem like a dream come true. But it could quickly become a nightmare if you’re not prepared for the costs of ownership. By considering several pool financing options and shopping around for the least expensive swimming pool loan you can find, you can minimize your costs and enjoy pool season without the stress.

Frequently asked questions about pool financing

What’s the best loan to get for a pool?

As with most things, there is not a single best loan to get for a pool. A personal loan could be a good bet if you need a large loan and you have a good credit score, while a home equity loan or HELOC could be better if you’re looking for the lowest interest rate possible and you don’t mind using your home as collateral.

What credit score is needed for a pool loan?

Personal loans are available even for people whose credit scores need work (below 640). Just remember that the lower your credit score is, the higher your interest rate will be and the lower the loan amounts you’ll qualify for.

How many years is a typical pool loan?

With a personal loan or home equity loan, you can generally target the length of time to pay back your loan. This will usually be between two and 10 years. The longer the loan, the lower each month’s payment will be but the more interest you’ll pay overall. With a HELOC, you’ll generally be able to draw from your credit line for 10 years, then pay back what you borrowed over 15 to 20 years.

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