There are several options when it comes to getting a loan to purchase a swimming pool.
The type of swimming pool loan you can get will depend on several factors, including the amount you want to borrow.
Every pool project is different, and the required investment will vary. For example, if you are looking to install an above-ground swimming pool, the cost could be from £5,000 - £10,000, meaning that an unsecured loan or personal loan could be the best solution. Unsecured loans typically have a repayment term between one and five years. In some cases, for loans of, say, £25,000, a lender may consider a loan term of 7 years.
Someone wanting to build an outdoor in-ground pool will have to pay significantly more, typically £100,000 for a pool 8m x 4m. For these larger pool projects, hiring a specialist swimming pool company is a good idea. They can give a more accurate quote for groundwork and any particular labour needed, as each project is unique.
Finally, for those with large houses and more extensive grounds who may want to extend their property to include a luxurious pool room, you could be looking to spend £250,000 plus.
With an outdoor in-ground pool or an indoor pool room, you will likely need to look at some type of secured mortgage. The difference with a secured loan or mortgage is that you can borrow more money and take the loan out over a longer term, making the repayments more manageable. However, you should be aware that you could lose your home if you miss your repayments.
Lenders are usually flexible about how you use loan money, as long as it's for a legal purpose. Home improvement loans are common and can be used for projects like pools, kitchens, and home extensions.
Most borrowers taking out a second charge mortgage do so to consolidate their finances, or carry out home improvements, or a combination of the two.
Most reputable swimming pool companies either work with a lender who can offer finance to their customers or recommend a finance broker.
Before committing to a large swimming pool or pool project at a considerable cost, consider the following:
How often will you use the pool?
What are the running costs?
Remember, if you are securing the loan against your home, you could lose it if you fail to keep up repayments.
Once you have got a detailed quotation from a swimming pool company, you will know how much you need to borrow.
As mentioned, reputable swimming pool companies often work with finance houses or banks who will be able to offer you finance. Generally, with these types of loans, the lender will send the funds directly to the swimming pool company upon completion of the works.
If you or a mortgage broker has sourced a loan, the lender will send the funds directly to you upon completion. It’s likely that you will pay the swimming pool company a deposit to start the project and, perhaps, a payment midway through. You will pay the final outstanding amount once you are happy that the project has been completed to your satisfaction.
Swimming pool companies will typically work with a Finance House or a Bank to assist their clients with funding their swimming pool purchase.
If, for any reason, the Finance House or Bank cannot assist, then you could approach a financial advisor or mortgage broker.
The mortgage broker should be authorised and regulated by the Financial Conduct Authority (FCA) and suitably qualified with the minimum of a CeMAP certificate (Certificate in Mortgage Advice and Practice).
The broker should then explore the options open to you. Assuming you are looking at an in-ground pool or pool room indoors, the options include a further advance with your existing mortgage lender, a remortgage or a second charge mortgage.
Every lender will carry out a credit search to see what your credit score is. The higher your credit score, the better your credit rating. This means that you will have more options at the most competitive rates. Conversely, the lower the credit history, the higher the interest rate you will pay.
Other considerations are your ability to make the monthly repayments on the loan and the amount of equity in your home. Equity is the difference between the value of your property and the amount you owe on your mortgage. The lender will conduct a detailed affordability check to determine your ability to afford the loan. More importantly, because you are offering your home as security, you need to be confident that you can make the repayments, not only now but for the duration of the loan.
Once a suitable product has been sourced, the mortgage broker will provide a comprehensive illustration showing all the financial details, including the interest rate, loan amounts, the term of the loan, any early repayment charges (ERCs), if the loan is variable or fixed, and, if fixed, for how many years etc.
Pool loans can be secured loans or unsecured loans.
The main factor is the cost of the pool. For loans up to, say, £30,000, you may be able to obtain an unsecured loan if you have a good credit score. The point to consider with an unsecured loan is that the maximum repayment term is usually between five years and seven years, meaning that the repayments might be high and not manageable.
For larger loans, say £40,000 plus, a second mortgage might be more suitable. Depending on your age, some second charge lenders allow you to borrow over a period of up to 30 years or more. While the repayments might be lower and seem more affordable with homeowner loans, you must remember that if you keep the loan for the full term, you will have repaid a very high amount of interest.
To reduce the interest you pay, most lenders allow you to make additional capital repayments whenever you want. Making lump sum mortgage repayments means finishing the loan more quickly and paying less interest. You should check your mortgage illustration to ensure the mortgage terms allow you to do this.
Whichever type of loan you opt for, you must remember that there are significant costs in running a swimming pool. If you want to install a heated swimming pool, it could cost you £4,000 - £5,000 a year to keep it warm throughout the year. You need to consider these costs when assessing if you can afford a pool.
If you don’t have the money to buy a swimming pool outright, a pool loan will allow you to purchase the pool now and enjoy it immediately.
In some scenarios, having a swimming pool may help with the sale of a property at a later date. However, most of the feedback is that potential purchasers see a swimming pool as a negative mainly because of the running costs and the safety hazard.
You may want to have a pool to keep you fit. Consider if it would be better to join a local gym with a swimming pool.
Our advice is to consider the consequences of borrowing money to build a swimming pool. Can you really afford it if you take into account the running costs and potential repairs?
If you are looking to raise finance for a swimming pool, home renovations or any other reason, please contact The Second Mortgage Company.