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Can You Get a Mortgage for a Boat? | Options Compared
From canal narrowboats to sailing yachts, getting the funding necessary for buying a boat is within reach. Let us at Clifton Private Finance untangle the complexity of marine mortgages and boat finance.
Contents
Buying a Boat - The Basics
Mortgages for Boats - 8 Things to Know
Mortgage for a Boat - FAQ
How We Can Help
Buying a Boat - The Basics
Getting the finance for a boat isn’t quite the same as when you buy a house. There are similarities, but also enough differences that some specialist knowledge is essential.
There are two key factors that separate marine mortgages from typical residential mortgages:
- A boat tends to depreciate in value rather than appreciate;
- You can float away on a boat.
This second point, while seeming quite comical and facetious, is a significant factor because it greatly affects the risk assessment when lenders consider your loan application and, when it comes to funding, risk is everything.
However, there are many similarities between a marine mortgage and a traditional home mortgages, too:
- It’s an asset-based loan tied to the asset (the boat or house) as collateral;
- You will need a deposit to secure the loan;
- Loan terms are spread over many years;
- Your creditworthiness will be a key consideration.
At Clifton Private Finance, our advisers can help arrange the best finance terms for your boat purchase. Here are the general minium requirements:
- UK boats and vesselse only (GB marked assets)
- Funding from £25,000 to £25m+
- Typical deposit requirement is 20-30%
- We can facilitate purchases through limited companies
To get a bespoke quote for your situation, complete our form below:
Mortgages for Boats - 8 Things to Know
1 - The Boat
Unsurprisingly, the largest factor when it comes to working out your finance options is the boat itself.
The term ‘houseboat’ refers to any vessel that floats and can be lived in, which ranges from canal narrowboats to impressive ocean-going yachts (with equally impressive price tags).
Most houseboat mortgages in the UK tend to fall in the £150,000 range or lower, covering a selection of narrowboats, houseboats and yachts.
However, finance can be arranged for private yachts and larger vessels for up to and in advnance of £25m for high net worth individuals.
Boat Type:
The type of your boat may affect the finance you can obtain, with some finance companies offering specific houseboat mortgages - often those with an existing permanent mooring (see below) and different marine mortgages for sea-going vessels.
Boat Age:
The age of your boat will impact its viability for financing. Boats that are particularly old may fall outside the scope of an appropriate boat mortgage, and it may be more suitable to look to other forms of finance.
As boats do depreciate, boats that cannot be purchased with a dedicated marine mortgage often fall comfortably within the limits for other finance options, such as a personal loan.
2 - The Mooring
It is absolutely essential that you do not overlook the mooring costs. There are multiple ways to deal with where to put your boat:
Continuous Cruising
If you never need to spend more than a couple of weeks in the same place (and that includes not bouncing back and forth between a select few mooring spots) then continuous cruising may be for you. You will have to pay leisure mooring costs at each location, but you’re totally free to roam.
Residential Mooring
Residential mooring is an arrangement with a marina which provides you with a permanent place to moor, complete with many of the facilities you might get from a bricks and mortar home, such as bin collections and a postal address. Residential mooring is in high demand, so should be well-considered prior to buying your boat!
A Mooring Mortgage
One other option is to purchase land that you can moor in privately. Mooring mortgages are available for you to buy suitable land and work a lot like a residential mortgage.
3 - Registration, Licences, and Insurance
Just because you are on a boat doesn’t mean you are completely exempt from authority charges. If you are permanently moored, then you will have to pay council tax and there are a range of licence fees for using the UK’s waterways and seas.
It is a legal requirement for your boat to be fully insured and registered for use before you can take it on the water - whether you are living on it or not. Follow this link to the UK government website to research more about boat registration.
Many professional traders and some finance providers are in a position to assist with your boat registration and other legal issues, offering this service as part of the sale and funding.
4 - Your Financial Position
Your financial history, credit report, and debt service ratio are primary conditions for obtaining a mortgage for your boat. As with a residential mortgage, you will need to provide supporting evidence for your financial situation as well as any identification documentation.
The loan-to-value of marine mortgage is typically lower than similar residential mortgages due to the significantly higher risk to the lender and you should be prepared to present as much as 25% to 40% of the boat value as a deposit.
5 - Loan Terms
Unlike a residential mortgage, terms for a mortgage for a boat are significantly shorter, with most marine mortgages lasting for ten to fifteen years.
Interest rates may also be higher, with current rates around 8%. By comparison, residential mortgage rates are currently typically between 5% and 6%, and terms can extend to up to 40 years.
6 - Other Collateral
If you already own a home, it may be beneficial to leverage your home equity against your boat mortgage. This could have significant advantages, such as a more preferential rate on your loan and a lower deposit requirement.
Speak to our remortgage and refinancing team at Clifton Private Finance to see how you can use your home as collateral for your dream boat.
Remember, however, that your property is at risk if you take out finance in this way, and failure to make repayments could result in the loss of both your boat and your home.
Related: Second Charge Mortgages
Mortgage for a Boat - FAQ
Q: Can you get a mortgage for a boat?
Q: Can you live on a boat in the UK?
Q: Can you live on a canal in the UK?
Q: Can you get a loan to buy a boat?
Q: Do you need a licence to own a boat?
Q: How do you get finance for a boat?
Q: How much deposit do you need to buy a boat?
Q: Is it cheap to live on a boat in the UK?
Q: Can you live on a boat and stay in the same place?
Getting a Boat Mortgage with Clifton Private Finance
At Clifton Private Finance we work tirelessly to obtain the best funding deals for our clients.
Our mortgage and lending specialists have well-established relationships with the wide range of UK lenders, positioning us perfectly to find you the deal you need to buy your boat. Speak with a Clifton advisor today to see how we can help.
Or to get a bespoke quote for your requirements, use our calculator below:
