Your Guide to Pool Financing in Canada
Backyard swimming pools have become very popular home additions in the age of COVID-19. The right pool financing can keep your family safe and active without breaking the bank. Keep reading to learn about loans for pools and how to make a good choice.
Types of Swimming Pool Financing
There are several types of swimming pool financing. Here’s a rundown.
Installment loans come from financial institutions like banks and credit unions. You’ll receive a lump sum to cover the pool’s cost. Repayment will come in the form of instalments. You’ll be charged interest at a rate calculated based on your credit score and other factors.
Some people choose to forgo dedicated swimming pool financing in favor of putting the cost on their credit card. While this may seem like the most convenient option, it will actually cost you much more than any other type of financing.
Credit cards typically come with interest rates approaching – or sometimes even exceeding – 20%. If you’re unable to get rid of the debt faster than it compounds, you’ll spend a lot of money. Remember, the average pool costs between $20,000 and $30,000.
Credit cards don’t even really make sense if your credit isn’t the greatest. First of all, you probably wouldn’t have access to $20,000 in credit with a poor score. Second of all, there are cheaper swimming pool financing options out there for people with poor or mediocre credit.
Some installers offer loans for the pools that they sell. You pay for this convenience, however. In-house financing typically comes at a higher interest rate. Companies may also be less inclined to negotiate on the pool’s price because you’re not paying up front.
Home Equity Loans
Home equity loans are, by far, the most popular means of swimming pool financing.
If you’re installing a pool in your backyard, you almost certainly own your home rather than rent it. Unless you’re a completely new homeowner, it’s also likely you’ve built up a considerable amount of equity in your home.
A home equity loan can help you unlock those funds at a much more reasonable interest rate than you’d find with other types of financing (particularly unsecured loans like credit cards).
Renovation home equity loans from Alpine Credits also don’t weigh your credit score as heavily as other types of financing. Our primary concern is the amount of equity you have in your home, which we calculate using the following formula.
It’s a very straightforward process, which is why so many homeowners prefer it to a pool mortgage or other type of conventional bank loan.
Refinancing your mortgage for a pool has become quite difficult given new rules and regulations. Nonetheless, it’s worth mentioning as it’s still an option you’ll hear about out there.
With mortgage refinancing, you’ll renegotiate your loan terms in order to access the equity you’ve built up.
The difference between a home equity loan and this type of refinancing is that you’re taking on a single, larger mortgage with refinancing while a home equity loan is an entirely new mortgage on top of your existing one.
How to Choose the Right Pool Financing
Here are some factors to keep in mind as you shop for a good pool loan.
Know Your Credit Report
It’s good to keep tabs on your credit score and what factors have made it what it is. This will help you avoid surprises when securing a loan for your pool. Factors like a high debt utilization ratio or recently missed payments on other loans can greatly reduce your chances of getting a reasonable interest rate.
If your score isn’t ideal, it’s good to know that before you begin applying for loans that weigh your credit rating heavily. You can instead just jump straight to applying for a home equity loan from Alpine Credits. Your credit score is not a major factor in approval so you won’t waste time and points on inquiries.
Do Your Research on Pools, Too
While buying a pool is largely a financial decision, you still need to choose the pool itself very wisely. Savvy buyers thoroughly research pools and consider things like:
- Special features such as jets and fountains
- Types of surfaces
- Ergonomics (especially important if you’re elderly)
- Safety features (especially important if you have young children)
Weighing these factors properly will help you buy a pool that lasts years without the need for expensive maintenance.
The advantage of using a home equity loan for your pool is that you can very easily and cheaply increase your budget if the right pool ends up costing you slightly more than you anticipated.
Remember that a Pool is an Investment
While a pool can be a great source of recreation, you should also remember the investment potential. Pools can boost your home’s resale value under the right circumstances. The full extent of COVID-19’s impact on this remains to be seen as people spend more time at home rather than heading to community pools.
A subpar or poorly-installed pool, on the other hand, will be seen by prospective buyers as a major liability. This underscores the importance of choosing a pool and installer very wisely.
Be Reasonable in Choosing a Loan Term
Choosing an appropriate term for your inground pool financing comes down to ensuring you can comfortably make payments without debt hanging over you for longer than necessary. Work carefully with your loan advisor to determine the appropriate term as this will have a substantial impact on interest rates.
Consider a Down Payment
While interest rates on pool loans tend to be lower than other types of consumer debt, they’re still traditionally higher than, say, a mortgage. As such, it often makes sense to put a downpayment on your pool. You’ll save a considerable amount of money on interest while having a more comfortable monthly payment.
Application Process for Swimming Pool Financing
Now that you know some tips for securing a pool loan, let’s discuss what you can expect during the application process.
If you’re seeking swimming pool financing via one of Canada’s major banks, the process will be somewhat extensive. The institution will thoroughly review your credit report and income to determine whether you qualify. You should hear back within a few business days concerning your application’s status.
If you go the home equity loan route, however, things will be much more streamlined. At Alpine Credits, we review applications within 24 hours. Our decisions are based less on your income and credit score but more on the equity you’ve built up in your home. This makes it much easier to qualify for a pool loan.
How Alpine Credit Can Help You Secure Pool Financing
We look forward to helping you make your dreams of owning a pool come true with an affordable, simple loan!
Frequently Asked Questions
Pool financing can certainly be a good idea if you’re able to make payments within the allocated term. Under the right circumstances, a pool can add value to your home, making it a worthwhile investment.
At a minimum, your credit score needs to be 660 or higher. You’ll find the best rates with a credit score of 760 and up.
Alternatively, you can secure a home equity loan. At Alpine Credits, we don’t weigh your credit score as heavily as traditional lenders do.
It’s very easy to finance a pool if you have equity in your home. You can unlock these funds via a home equity loan and use them to cover your pool purchase.
It’s trickier to get a pool loan if you’re going the traditional route. Lenders like banks have much stricter criteria. They analyze your credit report and also look closely at your income to determine whether lending to you makes sense.
If you manage to get approved, you’ll also typically see a higher interest rate with an unsecured pool loan.
There are too many variables to produce a meaningful average here. A typical pool costs between $20,000 and $30,000. At an interest rate of 10% on a $20,000 five-year loan, you would pay $424 monthly for a total loan obligation of $25,496.
Again, however, there are many, many things to consider here, including the interest rate you receive and what type of loan you acquire. Contact Alpine Credits to learn more about what to expect with your rate.
Pool loan terms rarely exceed 15 years. A term of about seven years is typical.