What you need to know about financing a swimming pool

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Adding a swimming pool to your backyard can boost your property value and your enjoyment of your home. 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, while an in-ground pool can cost $45,000 to $85,000 or more.

Swimming pool costs vary depending on your location, yard, and pool dealer’s service packages. Some packages include retaining walls, dirt removal and electrical hook-up, but not all swimming pool installations include these services. This means the price of a swimming pool project might be even higher than what your pool dealer originally quoted.

If saving tens of thousands of dollars to install a pool in your home isn’t feasible, financing swimming pool costs is an option. A swimming pool loan lets you pay off a pool build over time.

What is a pool loan and how does it work?

Because installing a swimming pool is expensive, you may want to look into swimming pool loans. 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 personal loan that works best for you.

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

Why should I be interested in a pool loan?

According to the National Association of Realtors, adding a pool to your home might increase its value by seven percent. Even if you are not immediately wanting to raise your home’s value, you may look forward to wading in your own pool during hot weather.

Other types of credit can be used to finance a pool installation, but these alternatives are often more costly than a pool loan.

For example, using a revolving line of credit, like a credit card, can technically be used to pay for a swimming pool. However, the average credit card rate is 14.61 percent. By comparison, the average personal loan rate, according to Bankrate’s data as of September 2021, is 10.46 percent. With swimming pool installations having an already high cost barrier that might otherwise make this home improvement project out of reach for homeowners, a pool loan can be a more practical solution for financing swimming pool costs.

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 up front.

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.

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. 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.

  • Takeaway: Using a home equity loan for financing swimming pool projects offers low interest rates but puts your home at risk if you’re unable to pay the loan back.
  • Who this is best for: This type of swimming pool loan is best for people who have significant home equity and are looking for fixed monthly payments.

HELOC

A home equity line of credit (HELOC) is 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. Because 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 uses your home as collateral, meaning you risk foreclosure if you don’t make your payments. 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.

  • Takeaway: HELOCs offer more flexibility when financing swimming pool expenses, especially if your pool dealer doesn’t offer an all-inclusive package.
  • Who this is best for: A HELOC is best for homeowners who have substantial equity and are looking for more flexibility with their monthly payments.

Personal loan

The most popular option among pool loans is the tried-and-true personal loan. A personal loan lets you 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 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.

  • Takeaway: Personal loans allow for financing swimming pools at a pre-set loan amount, and it’s a loan option that doesn’t put your home on the line if you default.
  • Who this is best for: A personal loan is a great option for someone with good credit but not a lot of equity in their home.

Swimming pool loan through the dealer

Another option to finance your swimming pool may be a loan through the dealer you use to purchase it. If you do opt for dealer financing, carefully read the terms you’re 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.

  • Takeaway: Financing swimming pool costs directly through your pool dealer can be a convenient but higher-cost option.
  • Who this is best for: A swimming pool loan is the best option for someone who isn’t able to qualify for a home equity loan, HELOC or personal loan.

Other considerations when financing for a swimming pool

There are a few final considerations that you should keep in mind before you apply for any pool financing product:

  • Monthly payment: Consider speaking with a few pool contractors to get a ballpark estimate of 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 your loan off quickly, you’ll need to pay more each month. If you plan to spread your payments out over the long haul instead, you may be able to pay a smaller monthly amount.
  • Repayment term: If you plan on selling your house in a few years, you’ll likely want to avoid a long loan term. You should also know that a home with a pool may be worth slightly more — but it may also appeal to a smaller group of buyers since not everyone wants a pool in their backyard.
  • Maintenance costs: If you plan not to move for a while, you’ll need to consider the long-term costs of owning and operating a pool. A pool is expensive to maintain. In addition to the large upfront construction costs, you’ll need to add pool cleaning equipment, lighting and heating, a pool cover and other regular maintenance items into your budget.

Frequently asked questions

As with most things, there’s 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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