Can you Get a Mortgage for a Canal Boat?

As canal boats have become more and more popular in the UK, many people are wondering whether they can get a mortgage to secure one for themselves. You see, not everyone has spare cash lying around to buy their new floating pride and joy and quickly start wondering about other options. After reading this article you will know whether a canal boat mortgage is a realistic option.

I want to start with a disclaimer. I am not a financial advisor and am not offering financial advice in any way. I am simply letting you know what your options are based on my experience in the canal boat community. Always consult a financial expert before taking the plunge with any type of boat financing.

What Finace Options are Available for Canal Boats?

For those of us that are cash poor, there are three main options available for financing a canal boat purchase.

Marine Mortgage

This is more like the traditional loan you would get on a land based house. Your new boat purchase is evaluated by the lender and you borrow against it as the main asset in the deal. Typically, interest rates for marine mortgages are higher than what you may expect from a regular house mortgage, and lenders usually often want a twenty percent down payment to boot.

Unsecured Personal Loan

If you would struggle to get that twenty percent down payment for a marine mortgage your next best option is an unsecured personal loan. If you are willing to shop around, the interest rates are lower than what you would expect here than on a marine mortgage. The major difference here is that the loan is not taken out against the boat like it is for the marine mortgage, instead this loan is taken out against your own personal credit rating. Therefore, it can be tough to get a good deal if you don’t have a decent credit history to show potential lenders how reliable you are.

Re-Mortgage

A lot of lenders will allow you to re-mortgage your land based house in order to buy other toys and hobby vehicles such as a canal boat. So this is more for someone that is looking for a canal boat as an additional leisure interest rather than a permanent home. The interest rates on these types of loans will usually be quite competitive and as such this option is great if you want a loan for the cost of the canal boat only, without having to start from scratch looking for a mortgage.

Anything Else to Consider?

For the types of loans commonly available for buying canal boats, they will usually only cover around 70-75% of the cost of a used boat and 80-85% of a new boat. Payment terms are usually limited to 15 years for canal boat finance as well. And if you are a live aboard canal boater, you will probably be requested to give a permanent mooring address. The fear for the finance company is that you will float off (literally) never to be found again 🙂

What Option is Best for Me?

Marine mortgages used to be all the rage when buying boats for use on the UK’s inland waterways, however many of the providers of these mortgages have pulled out of the market. And when you can find them they are often at pretty high interest rates when compared to a traditional mortgage, as well as there being a high percentage required to pay down your deposit. This means that the best option for many people is the unsecured personal loan which has overtaken the marine mortgage in popularity for canal boat buyers.

I personally wouldn’t recommend re-mortgaging your house to buy a canal boat, but then again I am pretty risk averse. If you were thinking of this route, be sure to crunch the numbers and get professional advice to make sure you are not overstretching yourself.

Do I have Any Other Options?

If you are struggling to find a good finance option for your new canal boat, I would suggest lowering your boat budget and simply saving up the money you need to buy the boat outright. If you are willing to take on a project boat, you could get something workable for as low as 5-10,000 British pounds. And you can get some good condition older boats for not much more.

I know a lot of people like the idea of a shiny new boat to cruise around in, but make sure to weigh up all your options before going this route. And only do so if you know you can comfortably pay back the loan. Otherwise, start searching all over the internet for that bargain boat you can buy outright! Patience is a virtue when doing anything financial in life. You don’t want to jump into something like this only to find yourself over burdened by a debt you can’t pay back easily. This goes against the very ethos of canal boat life!

The only relief you will have when financing a canal boat is the fact that the market is hot right now. Narrowboating has turned into the ‘van life’ movement of the UK, meaning that there are new buyers in the market every day. This means that boats sell fast and often for inflated prices. At least you don’t have to worry about a massively depreciating asset when buying one with a loan. I recently wrote an article showing how much canal boats hold their value, if you are still not convinced 🙂

Mortgage VS Finance for a Canal Boat

My research clearly shows that marine mortgages are dying out and are rather hard to find at competitive rates. However, although it is not possible to get a mortgage for a canal boat, it is more than possible to get finance for one in the form of an unsecured loan. The tide is definitely turning in the world of marine finance for canal boats. Marine mortgages may come into fashion again one day, but for now a regular loan is the way to go.