Who doesn’t love a relaxing dip in the swimming pool on a sweltering, hot day? And when that swimming pool is in your backyard, it’s even better.
You could bring your friends together over the summer by hosting pool parties. You could teach your kids to swim right at home. If you rent out your place on Airbnb or Vrbo, you could fetch top dollar for the additional amenity.
Sounds like a dream.
If your house didn’t already come with a pool when you moved in, there’s still a possibility of turning your pool fantasies into reality if you have enough space.
And if you don’t have tens of thousands of dollars upfront to spend on a pool construction project, there’s always pool financing.
What Is Pool Financing?
Pool financing is when you borrow money from a financial institution or lender to cover the costs of building a pool. Pool construction typically costs anywhere from $17,971 to $46,481 with the average cost being around $32,059, according to HomeAdvisor.
Of course, the cost will vary based on the size, the type of pool, your location and where you plan to build the pool on your property. Adding a small plunge pool to a cleared, flat space in your backyard will cost considerably less than adding a resort-style pool with waterfalls and a jacuzzi to your property that requires you to cut down multiple trees and level the land.
Besides the personal enjoyment that comes along with having a pool, this addition to your home could boost your property value and make your home more desirable to future buyers, renters or short-term guests.
The high cost to install a pool means that many people rely on pool financing. There are several ways to go about getting a loan for a pool.
Options for Pool Financing
If you want to add a pool to your property, but don’t have the cash upfront, you have several options.
You could get a personal loan (sometimes referred to as a pool loan), a home equity loan, a home equity line of credit or a cash-out refinance. Some pool builders or retailers offer in-house loan programs through their partner lenders. You might also consider using a credit card as your method of financing.
Personal Loans (AKA Pool Loans)
Pool loans are unsecured personal loans offered by banks, credit unions and online lenders. You may be able to get a pool loan through the financial institution where you already have existing accounts, or you might choose to get financed from an online lender or financing consultant company that deals exclusively with pool loans and home improvement loans.
One of the benefits of personal loans is that you don’t have to offer up any collateral. If you stop making payments and default on your loan, you don’t have to worry about your house being foreclosed — though the lender still could sue you. If approved for an unsecured personal loan, you can usually receive funds within a couple of days, much quicker than some other financing options.
Because you don’t have any collateral backing the loan, however, these financing options can come with higher interest rates. Interest rates can start around 3% and go up to about 36%.
A borrower’s credit score, credit history, income and existing debt load all affect the interest rate.
Personal loan terms generally range from about two to 12 years — though some pool loans can have terms up to 20 years or more. You can get loans from $1,000 to over $200,000 to fund simple above-ground pools or elaborate in-ground pool projects.
Home Equity Loans
Home equity loans are essentially when you tap into the equity you have in your home and take out a second mortgage. If you have a significant amount of equity, you could finance your pool project this way.
Home equity loans generally have lower interest rates than personal loans because your home is used as collateral. If you default on your loan, the lender could foreclose on your home.
Also, with home equity loans you’ll face additional fees, like a home appraisal cost and closing costs, so be sure to factor that into your decision making.
Home Equity Line of Credit (HELOC)
A home equity line of credit or HELOC also taps into the equity you have in your home, but it’s a revolving line of credit that you can use for several years instead of a loan that provides you with one lump sum of cash.
With a HELOC, you can pull out funds as needed to finance your pool construction and other home improvement projects. While you’ll only pay back what you borrow, the interest on HELOCs are usually adjustable rates rather than fixed rates. That means your monthly payments can increase during your repayment period.
A cash-out refinance is essentially when you replace your existing mortgage with a new mortgage that exceeds what you owe on the house and you take out the difference in cash.
You can then use that lump sum to pay for your pool, and you’ll pay it back throughout the course of your new mortgage — over the next 10 to 30 years depending on your loan terms.
A cash-out refinance might make sense if you’re able to get a lower interest rate than your current mortgage. However, just like with a home equity loan or HELOC, your home is being used as collateral, and you’ll face additional fees involved in the refinancing process.
In-House Financing from the Pool Builder
Some pool companies may directly provide you with pool financing offers, so you don’t have to search for financing on your own. The pool companies typically aren’t offering the loan to you themselves, but they’ve partnered with a lender or network of lenders to provide you with financing options.
This type of financing is the same as applying for a personal loan or pool loan. The benefit is that you get a one-stop-shop experience instead of having to reach out to lenders individually. Your pool contractor may even be able to assist you through the loan process.
The downside is that you could potentially miss out on a better deal by only getting quotes from the pool company’s partnered lenders.
Because of their high interest rates, credit cards are usually not recommended as options for financing a new swimming pool. However, there can be situations where it’d make sense.
If you’re able to open a zero-interest credit card and pay the balance back before the zero-interest period expires, paying with a credit card can be a great option — especially if it’s a rewards card that’ll give you points, airline miles or cash-back for spending or a bonus just for opening the account.
If you choose this financing option, be sure that you’ll be able to pay off the balance in a relatively short period of time. Most credit cards only offer zero-interest periods for the first 12 to 21 months. After that your interest rate could go up to 18% or more.
Pool Loan Comparisons
Getting quotes from multiple lenders will help you select the best deal for your pool construction project. Here’s what a few top lenders are currently offering.
Pays the pool contractor directly
600 minimum credit score
Offers military discounts
Provides loans up to $500,000
Most loans are funded within 48 hours
No prepayment penalties
Supports a network of pool builders
650 minimum credit score
Offers military discounts
5 Steps to Securing Pool Financing
Follow these steps to secure a loan for your pool.
1. Determine What Monthly Payments You Can Afford
Before you dig into your pool financing options, you should be clear on what monthly payment you can afford. Having a pool is a luxury. You don’t want a pool construction project to jeopardize your ability to pay your bills and meet your needs.
Figure out how much disposable income you have to work with by comparing your monthly earnings to how much you typically spend each month.
Don’t forget to factor in maintenance and additional utilities usage when estimating how much you can afford to go toward pool costs.
2. Check Your Credit History
When you’re financing a pool, having a good or excellent credit score will help you secure a loan with a low interest rate. Ideally, your credit score should be 700 or above.
Some lenders may offer you financing if you have fair or poor credit, however you may have to pay a lot more over time due to higher interest rates.
To boost your credit score before applying for a pool loan, follow these steps.
3. Get Cost Estimates for Your Pool
Talk with pool builders to get estimates on the total cost of your desired pool project. Get estimates from multiple pool companies so you have a better idea of what options exist.
If the estimates come in higher than you expected, consider scaling down the size of your pool project or using different materials.
Make sure any additional work — like constructing safety fencing — is included in your estimate.
4. Choose What Type of Financing Your Prefer and Shop Around For Lenders
After you figure out what options are available within your budget, it’s time to decide on what type of financing you prefer.
Will you be applying for an unsecured loan or do you plan to tap into your home equity or refinance your mortgage? Are you going to purchase a small above-ground pool that you could pay off in 15 months using a zero-interest credit card?
Once you know what type of financing you’ll go with, reach out to multiple lenders so you can compare offers and choose the best deal. You may be able to use a competitor’s lower offer to get a lender to reduce their offer even further.
5. Complete Loan Application and Sign Off on All Paperwork
The final step to get your pool project financed is to complete any additional paperwork and sign off on the dotted line. Expect to provide information about your income and other existing debt.
Your credit score may take a dip after taking on new debt, but it should rebound as you make regular, on-time payments.
Alternatives to Pool Financing
Taking on debt for a new pool doesn’t have to be your only option.
You could put off your pool construction project for a few years and save up for the expense in cash. Open a high-yield savings account to use as a sinking fund and don’t make withdrawals from the account until you’ve reached your savings goal.
If you think you’re outgrowing your current home — or are looking to downsize — wait until you’re ready to move and then look for a new home with an existing pool.
Or if you’re okay with not having a pool in your backyard, you’ll save money by visiting public pools or renting private pools from Swimply on occasion. This is a good option if you think you wouldn’t get much regular use of having your own pool.
Frequently Asked Questions
You can finance a pool over 20 to 30 years, depending on the type of financing you secure. If you need decades to pay back the loan, you might consider refinancing your mortgage or taking out a second mortgage. Private, unsecured loans typically need to be repaid sooner, however some have loan terms of 20 years or more.
It all depends on your individual circumstances and preferences. If you’ve built up a ton of equity in your home and want to spread your debt payments over a lot of time, you might lean toward a home equity loan or HELOC. If you’ve got excellent credit and would qualify for a low-interest personal loan (unsecured loan), that might be the better option.
Ideally, you’ll want to have a credit score of 700 or higher to get the best interest rates for pool financing. Some companies, however, will accept lower credit scores. As a result, your loan may have a higher interest rate.
An interest rate around 5% is a good deal for a pool loan. You may be able to find rates even lower if you have excellent credit.
Nicole Dow is a senior writer at The Penny Hoarder.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.