Boat Finance Companies are not always easily found. But with some 15,000 people estimated to live afloat on canals, rivers and coasts throughout the UK, the demand is strong.
Many are permanently moored, while others mix cruising and mooring to suit themselves, according to the Residential Boat Owners Association.
Boat Finance in the UK
“Liveaboards” come from all walks of life and live in a wide variety of vessels from permanently moored houseboats to moveable narrow boats and Dutch barges.
But unless you’ve got the ready cash or are prepared to pay high personal loan rates, abandoning life ashore and buying a floating home can be tricky to finance.
You won’t get a mortgage for a residential vessel from standard high street lenders because they deal only with land-based properties. Instead you will need to go to a specialist in marine finance and the choice, even there, is limited when it comes to buying a residential rather than a pleasure vessel.
Leading Boat Finance Companies in the UK market are Pegasus Marine Finance, Arkle Finance and Lombard, offering mortgages on all sorts of inland waterway based vessels with a permanent, residential mooring agreement.
The marine financier is unlikely to, however, risk lending on sea faring vessels whose owners could conceivably disappear abroad and default on the loan, though it might consider a mortgage on a dumb-boat with no engine in a secure coastal mooring.
Around three quarters of the mortgages granted are on used vessels, already with a permanent mooring, while 25% are on newly built boats for residential use in which case it’s incumbent on the borrower to find a permanent mooring first.
Mortgage terms can run from two to 15 years, with 10 years being typical. Interest rates are variable and are charged at an APR of 9.9% on loans of £5,000-£25,000 and an APR of 8.8% on loans of £25,000 plus.
The maximum loan to value (LTV) is 80%. But it is crucial to understand that this means 80% of the value of the boat itself, which provides the security for the advance. It does not take into account the value of the mooring, which on popular waterways can cost up to several thousand pounds a year.
If, for example, a boat priced at £60,000 is valued at just £40,000, the maximum mortgage loan you’ll be offered is £32,000 (80% of £40,000), so you will need to find the other £28,000.
Prices for residential vessels can start as low as £15,000 for a modest, old narrow boat and be as high as £250,000 or more for palacial vessels in prime moorings. But marine mortgages advanced by Collidge & Partners are more typically on vessels with asking prices ranging from £30,000 to £90,000.
In short, for boat finance, the typical variable rates are between 6% and 8%, depending on the amount borrowed, and the typical fixed rate is currently 8.9%, set for the whole term of the mortgage which is typically 10 years. The maximum LTV is 80% of the cost of the boat.