Are you interested in installing a swimming pool in your backyard? Are you wondering how to best fund the project? Do you have questions about which type of loan is best?
There is no shortage of ways to pay for a swimming pool project. While cash may be an option — as long as you’re comfortable parting with a large chunk of your savings — it’s often best to explore the many types of loan products that are available.
What’s best for you may not be the best for the next person, so it’s critical to base your decision on your financial situation and the overall scope of the project.
Here are some of the many types of loans you can explore:
1. Home Equity Loan
If you have equity in your home, tapping into it is often the best way to fund a home improvement project. And that includes installing a swimming pool.
With this type of loan, your home is used as collateral. So, you’re able to secure a competitive interest rate (as long as you have good or excellent credit).
On the downside, your home is at risk of repossession if you default on your loan.
2. Personal Loan
This works in a similar manner as a home equity loan, with the biggest difference being that it’s unsecured. There is no collateral required.
With no collateral, your bank is taking on a bigger risk, which generally results in a higher interest rate (when compared to a home equity loan).
3. Home Improvement Loan
Some banks offer home improvement loans, which are very similar to personal loans. The primary difference is that these loans are often available for a longer period of time, such as 15 or 20 years. This leads to a lower monthly payment and less strain on your budget.
The tradeoff is a higher interest rate, especially when compared to a home equity loan.
At first, you may assume that a swimming pool project is out of your budget. However, as you learn more about the loan types above, it may become clear that there is an option that works for you.
If nothing else, contact several lenders to learn more about your options and the impact on your monthly budget. This will help you understand which type of loan is best, as well as the steps you must take to secure the funding you’re seeking.