How to Afford a New Swimming Pool Without Using Home Equity

Home equity is dormant wealth that can be tempting to tap when financing an exciting addition, such as a new swimming pool.

Although this route is convenient and fulfilling, it may not be wise to borrow against your house for this purpose.

Understand the risks and learn how to finance a pool without using your residence as an ATM.

Why You Should Fund a Swimming Pool Without Home Equity

Converting your built-up family equity into debt to fund a pool construction project has financial and legal implications.

A cash-out refinance resets the clock on your mortgage.

Replacing your current loan with a new one can lower your rate if market conditions favor you, and your credentials can justify it.

However, it may take years before you can break even and begin saving.

A new loan with fewer installments can reduce the amount of interest you have to pay overall.

However, it will increase your monthly payments, as the equity you liquidate gets added to your principal balance.

Taking out a secondary mortgage in the form of a home equity loan or a home equity line of credit adds another lien on your house whose holder can trigger foreclosure if you default, even though you’re current with your primary mortgage.

Moreover, touching equity increases the likelihood that your mortgage will sink into underwater territory.

In an underwater mortgage, the principal balance is greater than the house’s appraised value. In short, you owe more than your property’s worth.

In a housing crisis, you can’t afford to lose your ability to pay your mortgage, since selling the house with negative equity will undoubtedly result in a loss.

High home equity helps prevent your loan from going underwater and at least gives you the option to sell your property for an amount enough to cover your mortgage debt if you can’t afford to pay it anymore.

How to Finance a Pool Without Collateral

Funding a swimming pool project without using home equity — or any collateral — is more feasible than you might think.

Consider these unsecured pool financing solutions. 

Personal Loan

This option allows you to borrow money from a financial institution in a lump sum to cover a major expense without requiring you to pledge any assets.

Some lenders specialize in personal loans for swimming pool projects and directly pay builders in stages, discouraging contractors from doing slapdash work.

Interest rates are generally higher than secured installment loans due to the lack of collateral involved.

Fortunately, you may negotiate for favorable terms if you have desirable credentials, such as good, very good or excellent credit, high income and a low debt-to-income ratio.

Most personal loans are amortized, so they have fixed, predictable monthly payments.

Dealer Financing

Financing options extended by swimming pool manufacturers and contractors are a form of unsecured personal loans with a more convenient application process.

Vendors collaborate with third-party financial institutions to facilitate easier project funding for customers.

Although many dealers have multiple financing partners, their options are limited compared to the number of possible lenders in the market.

Credit Card

Funding the job with plastic is frictionless and instantaneous if you have available credit.

Spending thousands or tens of thousands of dollars on your card can yield a valuable reward in the form of points, miles or cash back.

The downside to credit cards is that interest accrues daily on unpaid balances, which can add up quickly.

Late fees can be high, and they typically increase with each subsequent instance that the minimum balance becomes overdue.

Peer-to-Peer (P2P) Lending

P2P lending is a viable alternative funding source for borrowers who don’t qualify for traditional personal loans for swimming pools due to limited credit history and other reasons.

Niche platforms directly connect you with individuals and businesses willing to finance home improvements and offer flexible repayment terms.

The drawback is that there’s no guarantee that someone will lend you money.

A willing lender may charge a higher interest rate to make the deal worthwhile in the face of high counterparty risk.

Buy Now, Pay Later

Buy now, pay later programs can be short-term loans with interest-free installments, making them an ideal option for DIY pool installation projects.

You can use them to buy supplies at a fraction of the cost up front and repay the rest over the course of weeks, months or even years.

The problem with these unsecured pool financing solutions is that missed payments can result in more exorbitant interest rates than those of credit cards.

Longer plans can involve credit checks and larger annual percentage rates.

Crowdfunding

Donation-based crowdfunding doesn’t entail repayment.

Any amount you raise after paying platform fees and all applicable taxes is basically free.

Soliciting money from strangers to finance your pool, hot tub or sauna is practical only if you can make a strong case for why you deserve the cash more than others.

Backers care about stories and narratives, rarely supporting project initiators unworthy of their finite resources.

Top 3 Pool Financing Options Without Home Equity

Out of all unsecured pool financing solutions, personal loans, P2P lending agreements and crowdfunding campaigns offer the best balance between risk and reward.

Consider these vendors to support your pool financing needs. 

Lyon Financial

Lyon Financial is a finance facilitator.

It relies on TransUnion to assess your credentials and matches you with the most suitable no-equity loan program offered by a lender in its exclusive network, which includes pool contractors that fund projects at the point of sale.

Lyon Financial can connect you with swimming pool personal loan lenders within the contiguous United States.

Key features

• Up to 30-year terms
• No consulting fees and prepayment penalty
• 24- to 48-hour application verification

Prosper

Prosper is an SEC-approved, auction-based P2P lending platform.

It performs soft credit checks for rate checking, which shouldn’t affect FICO scores.

This fintech company’s proprietary model incorporates nontraditional credit data, such as rental payment history, into decision-making to assess risk.

Once approved, investors have up to 14 days to fund your unsecured personal loan for a swimming pool.

Utah-chartered industrial bank WebBank originates loans processed through Prosper.

Key features

• Fair-credit acceptance
• Up to five-year terms
• Human customer service representatives

GreatBower

GreatBower is a crowdfunding platform that connects backers who want to bring meaningful home improvements to life and the homeowners who need them.

Anyone can create an account, but raising adequate funds to finance a swimming pool can take time.

Donors tend to gravitate toward projects that can have the most significant impact on people’s lives.

Key features

• Quick setup
• No up-front costs
• No credit check

Comparing Unsecured Pool Financing Solutions

Learn about the maximum funds you can access through Lyon Financial, Prosper and GreatBower and the fees they charge.

Evaluating Affordable Options to Fund a Swimming Pool Without Home Equity

Consider these factors to narrow down the most appropriate pool financing options for you:

• Mechanics: Familiarize yourself with a vendor’s business model to know which provides and receives funding and how.
• Requirements: Determine the minimum credentials you must possess to qualify and get favorable rates.
• Fees: Find out which party charges what to learn about the overall financing cost. 
• Availability: Look for a vendor that serves homeowners in your area to avoid wasting time and get funded as soon as possible.

Fund Your Swimming Pool Project Without Home Equity

Lyon Financial, Prosper and GreatBower provide different, viable paths to finance your pool project.

Explore these options to find the one that best suits your situation.