Adding an inground swimming Pool to your backyard can increase the value of your home and add years of enjoyment for family and friends. However, you consider all the implications of pool ownership before investing potentially tens of thousands of dollars on a pool. Swimming pools require continual upkeep and care in addition to their initial expense. According to PoolContractor.com, the average starting cost of an inground pool is $35,000 for fiberglass, $25,000 for vinyl liners, and at least $40,000 for Gunite. Even if you can save money on materials or labor, a swimming pool is still a significant investment. Consequently many homeowners wind up exploring pool loan options when it comes time to decide how they plan to pay for pool construction.

How Do Pool Loans Work?

First off, building a swimming pool can be a pretty costly proposition, especially in this climate where the average price for an inground pool has gone up 30% in the last two years. Swimming pool loans are available for most well qualified buyers. To get a better handle on which loans are best suited for consumers, we spoke with Greg Powell of Viking Capital, one of the leading providers of financing in the pool industry.

“A swimming pool loan can be the differentiator between buying the pool you really want and have to settle for a smaller pool. Having easy access to financing is a game changer for some homeowners”, explained Powell who has been helping homeowners secure pool financing for over 20 years.

Typically a pool loan can be obtained in a variety of ways. Consumers can shop around for a variety lenders to discover a pool loan that works best for their particular needs.

When you’re authorized for a usual loan from a bank, you’ll usually get all of your money right away. The loan will then need to be repaid with interest over a period of time. The interest rate and monthly payment you qualify for will be largely determined by your income and FICO credit score.

“Due to the hefty initial cost required for a new pool, many homeowners choose to borrow money and pay it off over time.” said Powell, “If you don’t have the cash up front, there are a variety of options that homeowners use to finance a new swimming pool.”

Let’s take a look at what a few of those options are:

Home Equity Loan

A home equity loan allows you to borrow against the value of your property and use it as collateral, allowing you to get a lower interest rate. Home equity loans are similar to personal loans in that they include a set interest rate, a set repayment schedule, and a set monthly payment that never changes.

“You’re essentially taking out a second mortgage when you take out a home equity loan for pool financing.” said Powell, “It’s a fixed-rate installment loan secured by your home equity.”

If you’ve lived in your house long enough to have built up enough equity, a home equity loan for a pool can be a good option for you. However, before jumping in wholeheartedly, you should consider all the pool financing options available and figure out the ideal one for you.

HELOC Loan

A home equity line of credit, often known as a HELOC, is a revolving credit line secured by your home that you can use to pay for significant purchases or consolidate higher-interest debt on other loans. The interest on a HELOC is frequently lower than on other forms of loans, and the interest may be tax deductible. Because tax rules may have changed, please ask your tax expert about interest deductibility.

You borrow against the available equity in your home with a HELOC, and the house serves as collateral for the loan. The quantity of available credit is replenished as you repay your outstanding balance, similar to a credit card. This means you can borrow against it again if necessary, and you can borrow as little or as much as you need for the duration of your draw period (usually 10 years), up to the credit limit you set at closing. The payback period (usually 20 years) begins after the draw period ends.

Using a HELOC to finance your swimming pool has some drawbacks, much like using a home equity loan. Because a HELOC uses your property as collateral, you risk losing your home if you don’t keep up with your payments. You’re also bound by the same equity limits, so a HELOC is only a viable option for borrowers who have a considerable amount of equity in their home.

Perosonal Loan – Unsecured Loan

Many pool buyers opt to do a personal or unsecured loan which is a very popular method of financing a pool. A personal loan allows you to borrow a lump sum of money with a fixed interest rate and repayment time.

Personal loans are unsecured, which means you don’t have to put your home up as collateral in order to qualify. If you have exceptional or very high credit, or a FICO score of at least 740, you may be eligible for a pool loan with a low fixed interest rate.

When compared to other swimming pool loans, personal loans frequently have minimal or no costs, making them a very cost-effective solution.

“A personal loan is an excellent choice for someone who has strong credit but little equity in their home.” said Powell.

Financing Through a Dealer

Another method consumers use to finance a swimming pool is buy from a dealer that offers their own financing. If you opt for a builder that does this, make sure you read the fine print carefully and expect to pay higher interest rates. For consumers who don’t qualify for a personal loan or home equity financing, this may an option if all else fails.

This type of financing is a solid alternative for someone who may not qualify for a home equity loan, a home equity line of credit, or a personal loan.

Before Applying For a Pool Loan

“Consider consulting with a few pool contractors to obtain a general estimate of your final pricing, then play around with a pool loan calculator to see how much your monthly payment might be.” said Powell. “Playing with the numbers can give you an idea of what your monthly payment will look like and how much pool you can afford.”

“Paying a little extra each month helps pay off the loan quicker.” Powell explained, “Conversely, if you want a lower payment, you may be able to pay a lower monthly amount if you spread the payments out over more years. Typically we see consumers who opt for a 15 or 20 year loan” said Powell.

Repayment term: If you have designs on selling your home in a few years, it’s a smart idea to avoid a pool loan with a longer repayment period. A home with a pool may be worth slightly more, but it may only appeal to a smaller set of purchasers because not everyone wants a pool in their backyard.

If you’re already in your dream home and not going anywhere you’ll need to think about the long-term costs of owning and managing a pool. Maintaining a pool is costly. You’ll need to budget for pool cleaning equipment, lighting and heating, a pool cover, and other routine maintenance things in addition to the substantial upfront building costs.

Should I pay for my pool in cash?

If you have the means, another option to explore is purchasing your new swimming pool with cash. This will save you money in the long run by avoiding the need to pay additional interest. Think about what you’d do with this money. You don’t want to deplete your emergency fund, so compare the interest rate on a swimming pool loan to the returns you’d earn from investing your money instead.

If you don’t have all of the money you’ll need to buy a pool, you’ll want to look into financing the rest with some form of loan. Even if you have the cash to pay for your swimming pool outright, you may not want to leave yourself cash poor to buy a swimming pool.

What is the best loan for a pool? What are the most often asked questions concerning pool financing?

There isn’t any one perfect answer for which type loan to get for a pool. If you need a large loan and have strong credit, a personal loan may be a decent option, but if you want the lowest interest rate and don’t mind putting your house up as collateral, a home equity loan or HELOC traditionally has a much lower interest rate.

For a pool loan, what credit score is required?

People with credit scores as low as 640 may qualify for a pool loan. “Consumers should keep in mind that the lower their credit score, the higher their interest rate will normally be. They will also normally be approved for smaller loan amounts than buyers with optimum credit.” said Powell.

What is the duration of a typical pool loan?

You may normally target the amount of time it takes to repay a personal loan or a home equity loan with a personal loan or a home equity loan. Typically, this will be between two and ten years. The longer the loan, the cheaper your monthly payment will be, but you’ll pay more interest in the long run. With a HELOC, you’ll typically be allowed to draw from your credit line for ten years before repaying the loan over 15 to 20 years.

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