Financing a swimming pool – Risks and what you need to know

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Everyone wants to swim.

Swimming pools are growing in popularity as more homeowners across the country install swimming pools, while buyers seek homes with swimming pools. In 2020, residential inground swimming pools have increased more than 20 percent of the previous year.

Today, a house with a pool sells for about $ 27,199 more than a comparable house without a pool, according to the National Association of Real Estate Agents. However, since swimming pools typically cost over $ 50,000 to install, they don’t exactly provide a great return on your investment.

Pro tip

Always gather quotes from a few different contractors before choosing a company for the installation of the pool.

Installing a pool in your backyard won’t necessarily be profitable if you eventually decide to sell your home. But if you are planning on doing it, there are several ways you can pay for it before the hot summer season arrives. With the current low interest rates on home loans, maybe now is the time to consider financing a swimming pool.

What is a group loan and how does it work?

You may have seen banks and other lenders advertising something called “pool loans” – these are usually unsecured personal loans that can be used for almost anything.

Personal loans generally have higher interest rates than other financing options. So, if you want to finance a swimming pool for your home, we recommend that you research different types of financing first.

Whichever funding option you choose, make sure you understand the full commitment, including all fees and costs, involved in funding the pool. Many financing options will require you to use your home as collateral, which means you risk losing it if you can’t pay off the loan. For a large purchase like a swimming pool, loan calculators can help you estimate the cost.

Finally, you don’t want to find yourself stretching your finances too much for this yard improvement. “An addition to the pool should improve your life and lifestyle, without compromising your ability to comfortably cover critical financial obligations such as mortgage expenses, education savings, retirement funds, car payments and expenses. ‘other current expenses,’ said Todd nelson, senior vice president of strategic partnerships at online lender LightStream.

Best Ways to Finance Your New Pool

Installing an inground pool is a big project, and many homeowners may not have the money to pay out of pocket. If you are looking to finance a swimming pool, several solutions are available to you.

Home equity loan

A home equity loan allows you to borrow against the equity in your home. This is also known as a second mortgage. The amount you can borrow depends on the value of your home and how much you still owe on your first mortgage. This type of loan can be a good option if you have high equity, but it may not work if you’ve recently purchased your home.

“These loans often do not provide sufficient financing to cover the full cost of a swimming pool for new owners,” said Justin goldman, CEO and co-founder of RenoFi, a financial services platform that partners with lenders to provide home improvement loans. “Pools often cost at least $ 50,000 depending on market, materials and size, so the average homeowner of a $ 400,000 home who has paid off $ 80,000 so far could only get a loan of. $ 40,000, assuming the bank’s maximum borrowing power is 90% of current value. This leaves it up to the homeowner to cover the remaining cost and repay the loan over time.


A Home Equity Line of Credit, or HELOC, offers a more flexible way to borrow against the equity in your home. Instead of receiving a lump sum, like you would with a home equity loan, a HELOC is a revolving line of credit. Similar to how you would use a credit card, a HELOC allows homeowners to borrow and use the financing they need.

Refinancing of collection

A cash-out refinance is a type of home loan. You refinance your current mortgage with a new one that is worth more than what you owe on the house. You get the difference back in cash as a lump sum, which you can use to fund a pool. If you’ve built up enough equity in your home, this can be an affordable financing option.

“If you are already considering refinancing, refinancing with withdrawal is a great option because it doesn’t require you to take out a second equity loan, just refinance your first mortgage. However, closing costs can be steep, so be sure to refinance at a lower rate, ”Goldman said.

Personal loan

These loans are generally unsecured, so you don’t have to worry about putting your home as collateral. But since personal loans usually don’t require collateral, they also come with higher interest rates. You should at least check out other home improvement financing options before taking out a personal loan.

What to consider when applying for a pool loan

When applying for pool finance, your personal credit is the primary concern. The higher your credit score, the better the interest offer you are likely to receive. Many lenders offer the best terms to borrowers with credit scores in the mid-700s and up.

The length of the loan will depend on the method you choose for funding the pool. But many lenders allow a term of ten years or more. When deciding on funding, be sure to factor in all costs associated with the project.

“With any renovation, it’s important to know how much you have to spend,” Nelson said. “With a solid budget in place, you can prioritize the scope of your project; make informed choices about how much you have available for construction labor, products and services; and determine how to finance the project in the most economically reasonable manner.

It’s a good idea to overestimate expenses when budgeting. There are usually costs that you might not see when you are in the planning stages.

“Determining your knowledge to install a swimming pool can affect groundwater management and plumbing,” Goldman said. “A lot of people don’t take permits or surveys into account when creating their budget that might be required by their municipality. You don’t want these hidden costs to surprise you.

Group loans or outright purchase

Funding a swimming pool will increase the cost of the project in the long term. If you are considering taking out a loan, making a large down payment will reduce the interest you will pay over time, which means the overall cost of financing will be lower.

Once the pool is installed, you should also create a budget for the repairs. “Remember, the annual pool maintenance costs add up. A loan can help pay for the initial setup, but you’ll shell out thousands each year to make it work, ”Goldman said. Annual pool maintenance is expensive, so keep that in mind when focusing on your immediate summer plans.

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