Interested in borrowing money for a swimming pool? Find out everything you need to know here.
Figuring out the financial side of getting a new swimming pool can be tricky. If you don’t have cash or savings on hand there are several loan options that can help you out.
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How does swimming pool financing work?
There are two main loan options for financing a new swimming pool: home equity loans and personal loans.
With a home equity loan, the amount you can borrow is secured against the equity you hold in your home. This means your property is used as collateral for the loan. That security can lead to lower interest rates when compared to those offered with personal loans.
As a taxpayer, you can also claim a deduction on the interest you pay towards the first $100,000 of a home equity loan secured by your first or second home. While most home equity loans and lines of credit qualify for this tax benefit, you may fail to make the cut if you have more than one home, or if your mortgage exceeds the value of your home.
If that’s the case, you may want to consider a personal loan. An unsecured personal loan means you won’t have to put up any assets to secure the amount you borrow, while you can choose the assets you use if you opt for a secured personal loan.
Personal loans can also be a sensible choice for recent homebuyers and homeowners who live in areas with lower-priced properties. As personal loans are unsecured, they tend to have higher interest rates. But you can still get a competitive interest rate by comparing personal loan options – especially if you have good credit history.
Personal loans you can apply for
Before requesting a loan, you’ll need to figure out your budget for the pool. Considering the following factors will help you get quotes and estimates of the money required to get it all done.
- Water features. These can include waterfalls, fountains, jets and bubblers. You can opt for spillover hot tubs and spas as well.
- Surfaces. You can find pool tiles in an array of colors, textures and designs. Tiles used inside and outside the pool also come in different materials based on their functions. For example, you may want to consider slip-resistant tiles for the area around the pool, and glossy, colored tiles for inside it. If you plan to get a vinyl swimming pool, remember that you’ll have to replace the pool liner periodically.
- Cleaners. There are several different types of pool cleaners. Suction cleaners one of the most popular options. They work as skimmers and complement the pool’s pumping and filtration system. Pressure cleaners use water pressure and usually come with replaceable filter bags. Electric cleaners, or robotic cleaners, come with self-contained filters and pump systems. If budget is not a constraint, you can go a step further and install an automated control system.
- Lighting. Underwater lights increase safety after dark, and can create a fun environment. You can also use floodlights and spotlights to draw attention to specific features, while low-profile lights are a practical addition to paths and walkways.
Who qualifies for a pool loan?
Most lenders look for applicants who:
- Have good or excellent credit. This means having a credit score over 670 (preferably over 740 for the best deals) and at least three years of good credit history.
- Have a steady source of income. This includes your job as well as other sources of income like investments, alimony checks and child support. Lenders typically require applicants to make at least $25,000 annually, though you might need to make near six figures to get the best deal.
- Have a low debt-to-income ratio. Most lenders require borrowers to have a debt-to-income ratio of 45% or lower, though the lower it is, the better chance you’ll have of getting competitive rates.
- Be a US citizen or permanent resident. Some lenders — not all — require that you live in the US as well.
- Be at least the legal age of majority in your state. In most states you must be at least 18 years old to legally be able to take out a loan, though some states go as high as 21.
How to compare swimming pool financing options
Features you should consider when comparing swimming pool loans include:
- Interest rate. Interest rates for swimming pool loans vary depending on the product you choose, the amount you borrow, the loan term and your financial circumstances. Remember that even a small difference in the interest rate can make a huge difference. That’s why it’s important to compare low interest rate personal loans to find the most appropriate and affordable option for your circumstances.
- Loan amount. If you’re getting a home equity loan, the maximum you can borrow depends on the value of the property you’re using to secure the loan. Your creditworthiness and financial situation also have an impact on the loan amount for both home equity products and personal loans.
- Loan term. While opting for a longer loan term leads to lower payments, it also means you will pay more interest over the life of the loan. Ideally, you should repay your loan as quickly as possible to keep interest payments down.
- Secured or unsecured. With a home equity loan, the money you borrow is secured by your property. You can also get a secured personal loan by borrowing against another asset, such as your vehicle or a term deposit. If you fail to make timely repayments towards any kind of secured loan, you stand to lose the collateral (i.e. your house or car). This is not a risk with unsecured loans, although there are financial penalties for failing to make payments.
How much does a swimming pool cost?
The cost of installing a pool depends on the type of pool and its size. As a general guide, a concrete or granite pool can cost $20,000 to $55,000, a fiberglass pool costs around $15,000 to $25,000 and it costs anywhere from $1,500 to $5,000 for a vinyl lined pool. However, the costs don’t stop there – safety and maintenance are also factors you need to consider for your budget.
Fencing, for example, is an important safety feature and can cost a lot of money, depending on the type of fencing and specific regulations you need to meet. There could be additional construction costs if you run into major issues such as water lines or large rocks during the installation of the pool. Many home insurance providers charge higher premiums for homes with swimming pools.
Meanwhile, pool maintenance is an ongoing cost that’s essential for the safety and value of your property. Expect to pay a monthly or annual fee if you’re hiring a professional to maintain your pool. Remember that even if you plan on maintaining it yourself, you’ll still have to spend money on pumps, filters, chemicals and other cleaning supplies.
Things to avoid when financing a swimming pool
If you feel you may have trouble making timely payments, avoid taking a swimming pool loan in the first place. Not repaying a loan on time will have an adverse effect on your creditworthiness. If you default on a secured loan, you also stand to lose your collateral.
If you plan to get a pool with the sole purpose of adding value to your home, it’s also important to carefully research your options to make sure it will be considered as an asset to the existing property. Look at recent house sales in your area and pay attention to the value of properties with and without pools. Prospective home buyers in some neighborhoods don’t want the added maintenance costs that a swimming pool brings.