Consumer Boat Buying Guide
Homes and cars represent some of the most expensive single-item purchases individuals make during their lifetimes, but spending doesn’t always cease at the shoreline. Boats add to the cost of living for water sports enthusiasts, who eagerly take-on the cost of ownership. And though boat buying is born of passion for the open water, a prudent approach makes the most of recreational budgets and ensures affordability.
As you prepare to take the plunge, due diligence guarantees a smooth transition to boat ownership. From choosing the best boat for your needs to securing reasonable financing, weigh your options carefully before making commitments.
Other Advantages Of Hels
A home equity loan is a second mortgage. That means its borrowing secured on your home. So you get your cash, free and clear.
The boat itself secures a boat loan. So the lender will likely have rules about the sort of craft it will lend against. With a HEL, you set your own rules.
So you can buy that classic, mahogany Chris Craft speedboat if you want. Few boat lenders would touch it. And you can buy your new boat without first selling your existing one. Boat lenders typically have strict oneboatloanatatime rules.
Finally, you can spend as little as you want on your new boat. However, the higher setup costs of a HEL mean youll probably borrow with one of these only if an inexpensive boat is one of a list of purchases or expenditures you want to make from the proceeds.
How Expensive A Boat Can I Afford
Unless you plan on living in a houseboat year-round, a boat is a luxury or leisure item, not a necessity. As such, you need to set realistic expectations of how much you can afford to pay month to month, and how much you have to set as a down payment. Considering that youll also have to account for moorage, maintenance, and fuel costs, definitely give yourself some padding in your budget.
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Why Dont Traditional Mortgage Lenders Loan On Houseboats
You wont be able to use a high street lender for the purchase of a houseboat intended for permanent residence, as they simply wont take the risk.
Houseboats cant be registered with the Land Registry, plus no traditional mortgage lender is going to lend against something that could literally sail away.
How Did We Choose The Best Boat Loans
Personal Finance Insider’s goal is to help smart people make the best decisions with their money. We combed through the fine print of many boat loans and lenders so that you don’t have to. We considered the factors that are the most important to boaters, including:
- The type of boats financed: We searched for lenders that offered loans for the most shapes and sizes of boats, from houseboats to sport boats.
- Interest rates: We compared the starting points of interest rates from many banks, and compared ranges where available.
- Few or no fees: We looked for lenders that offered boat loans with the fewest amount of fees on each loan.
- Loan amounts: We chose lenders with the widest variety of loan amounts available to help everyone find a loan for their boat-buying budget.
- Widespread availability: Lenders we considered have loans available in almost all 50 states, if not all.
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What Are Typical Boat Loan Terms
Some lenders offer boat loan terms up to 20 years. Boat loan terms can depend on the borrower, loan amount, the lender, and other factors. Before purchasing a boat youll need to figure out how to afford your purchase. If you are financing, the loan term can weigh heavily on your monthly payment. We recommend estimating what your purchase will cost and how much you will need to finance. Once you have ballpark estimates you can use online boat loan calculators to determine what term provides you the most favorable payment. If you have excellent credit you should be safe to assume that youll secure a low rate. However, if you have credit challenges you may want to use a higher interest rate when estimating payments with a boat loan calculator. Most boat loans are secured through dealer financing. Most dealerships have relationships with banks and financial institutions so that they can provide financing. If you plan on using dealer financing, you can visit the dealership to get pre-approved and estimate monthly payments.
Mortgage For Your Houseboat To Realise Living On The Water
Living on a houseboat has an idyllic character and is very popular. After all, water has a calming effect on many people. Houseboats in the built-up area are cosy and free at the same time. Houseboats outside the city offer a picturesque and wide view. Just as with a house on land, buying a houseboat is a big expense. You usually need a mortgage for this. Finding a bank to provide you with a houseboat mortgage, however, is not that easy. Simply comparing the mortgage interest rates and then choosing the best bank to do so does not work for a houseboat mortgage. The houseboat or water villa mortgage can be taken out with only one bank. We at Trifium will gladly inform you about the possibilities.
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Which Houseboat Financing Option Is Right For You
According to Raney, the first step in buying a houseboat is truly understanding your purchase.
The first thing buyers need to be aware of is what exactly they are buying, he said, from the type of materials the boat is made out of to its condition under the water, and even whether youll own the space where it will be docked. From a financing perspective, he also mentioned that the biggest question is What exactly is it, and how does the municipality view it?
Here are some other things to consider:
- Not the usual lending requirements: Getting approved for a houseboat loan is about more than a credit score. Lenders are going to pay more attention to liquidity and your history with other assets. I dont think there will ever be a first-time homebuyer option for a houseboat loan, said Raney. Im looking for income, and a secondary asset as a source of repayment. For houseboat loans, its more about your overall financial picture.
- Buy a slip with the houseboat: Including some real estate in your loan will sweeten the deal for lenders. In Seattles Lake Washington, expect to pay between $50,000 and $150,000 to own a slip, plus additional homeowners association fees. To a lender, that provides a little more assurance that is buying a home, Raney said. Otherwise, youll need to pay rent for a slip each month.
Whether Youll Need A Marine Survey
When you apply for a secured boat loan, the boats value will be a factor in how much you can borrow.
If youre not getting a new boat, you should get a marine survey. During a marine survey, an inspector will examine the vessel, engine and trailer, detail the boats condition, note any repairs needed and determine whether its safe to take on the water.
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Can I Get A Mortgage On A Boat
In a nutshell, yes, but it may require you looking beyond standard mortgage lenders to source suitable finance. This is because a houseboat isnt a typical property it has no fixed address and will usually be significantly cheaper than a standard home. It also has the unusual drawback for lenders in that it can quite simply float away. That said, there are several specialist lenders out there that will provide this kind of marine finance, so be prepared to do a bit of research and answer a lot of questions once youve found a provider.
Like with standard mortgages, your narrowboat mortgage lender will have a lot of affordability criteria that youll need to pass before youll be accepted for the loan. The following factors will typically be considered before a lender will decide whether to approve you and, if so, how much theyll offer you:
- Your annual income
- Your age
- The kind of boat youre looking at
- Your buyer profile
- Your deposit .
Youll usually be required to have your boat professionally surveyed to have an accurate valuation, and youll need to make sure all required insurances are in place. Its worth bearing in mind that canal boat mortgages typically have shorter terms than standard mortgages , though youll likely continue to come across both fixed and variable interest rates. Its important to do your research and, ideally, speak to a specialist broker who can help you find the right deal.
How A Marine Mortgage Can Help You
Buying the boat of your dreams can be an easy affair if all the paperwork is in order and you have the cash ready to go. Most of us are unlikely to have that sort of cash lying around, of course, which is why a marine mortgage is usually the perfect solution that helps you fulfil the dream of owning a boat.
Promarine Finance can provide you with a marine mortgage to suit your circumstances and can also provide knowledge and support all the way through the process.
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What To Consider When Buying A Boat
Just as owning a car comes with additional costs, the same can be true for watercraft vehicles. In addition to your monthly payments for your boat loan, you should budget accordingly for ongoing costs like fuel, storage, insurance, licenses, registration, repairs and maintenance. If youre not buying a new boat, you may need to pay for an inspection, or a marine survey, to determine if the boat is safe to take out on the water.
Alternative Ways To Finance Your Boat
If you need to finance an older boat and these options do not work, you also may consider obtaining a personal loan or using money available through a home equity loan or line of credit. The advantage of these types of loans is that because the boat is not used as collateral, its age will not be relevant to lenders.
Using these types of loans may enable you to borrow to buy a boat that is older than lenders will approve otherwise. Personal loans, because they are unsecured, require excellent credit and are more likely to be obtained for less expensive boats. They also typically will carry a higher interest rate than a loan secured with collateral. They also will need to be repaid in a relatively short period of time. Home equity loans and lines of credit use the equity in your home to buy the boat. Because this loan is secured with your home as collateral, the interest rate will likely be lower than many other financing options.
Depending on your tax situation, you may also be able to deduct the interest you pay. If you default on the loan, however, you will likely lose your home. These loans will typically require an appraisal of your home and may have additional fees, which some lenders will waive. Home equity loans are fairly straightforward you borrow a certain amount and begin repaying it over time.
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What A Mortgage Form Contains
The important information on this form is a signature by the vessels owners as well as the addresses of the mortgagee and mortgagor. Its important to note that the mortgage has to cover the entire vessel. It cant just cover part of it, only cover the vessel when its in a particular location or doing a certain job. The vessel has to be identified by name, hull number and/or official number. A key element that sometimes gets overlooked: the mortgage cant be accepted unless the vessel has a valid certificate of documentation or it has an Application for Initial, Exchange or Replacement, CG-1258, on file . Of course, you can find all of those same files elsewhere on our site.
Certificate of Documentation First
When you want to get a boat loan, you dont want to have to wait around for it. So, we offer our customers ways to expedite the process. For example, if you scroll down on the preferred mortgage page, youll see that theres a link to priority request/rush processing. For a few extra bucks, we can speed along the process for you. That way, you can get your boat lien faster. Of course, as we mentioned, you do want to keep the Certificate of Documentation up to date with these mortgages. To make that easier, we have a renewal advanced payment option on this page as well. Youll find that you can renew this documentation for up to five years in the future. You can get the peace of mind that comes from having one less thing to worry about.
Ship Mortgage History
Where To Look For Boat Loans
Your three main options for boat loan lenders are traditional banks, credit unions and online lenders. There are pros and cons to all three, and the method you use may depend on your situation and your needs. Lets take a look at these:
Bank: The traditional brick-and-mortar route can be beneficial if you go through your current bank. Existing customers are often offered discounts or more favorable loan terms. However, borrowing from a bank will often require you to secure the loan with collateral.
Credit unions are nonprofit institutions that can offer loans to those with lower credit scores. You must be a member of a credit union prior to applying for a loan, though, and your history with the institution can play a part in your approval. Loans from credit unions are also more likely to be secured ones.
Online lenders: Online lenders can typically approve and deliver funds faster than brick-and-mortar banks or credit unions, and can offer unsecured personal loans. They may also offer preapproval via a soft credit check with no risk to your credit score so you can see what rates and terms you qualify for ahead of time.
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Is Boat Financing Hard To Get
Compared to other types of financing such as vehicle loans, boat financing may be harder to get. Unlike homes and cars, most people do not need a boat. This is one of the reasons why it may be more challenging to secure financing. However, if you have good credit and solid income getting a boat loan may be easier than you think. You can check with your bank or credit union to see if they offer boat financing. In some cases, banks and credit unions can offer better rates and terms than boat dealerships. Keep in mind that if youre buying a used boat, it has a value just like a used vehicle. Most lenders evaluate the value of a boat using NADA. Its important to make sure youre paying a fair price for a boat so that your loan to value requirements are in line. If you have credit challenges you may be able to use a personal loan for boat financing.
Guide To Boat Financing
Unless we are talking about a kayak, boat ownership is not exactly known for its affordability. If you dream of owning a superyacht, or even just a modest sailboat or pontoon boat, how much is it going to cost youand how expensive a boat can you afford?
You will probably need to get a boat loan unless you are planning on paying the full price of a boat out of pocket. Financing a boat is a process similar to getting any other type of loan, and can be broken down by answering a few simple questions.
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Calculate Payments With Our Boat Loans Calculator
Use our boat payment calculator to determine a monthly payment that you can afford when looking to finance a new or used boat.
Simply enter your desired amount, estimated interest rate, and the loan term over which you intend to pay back the loan. Once you’ve input the information, the calculator will generate your estimated monthly payment on your boat loan. Take this number and plug it into your current monthly budget.
What Other Options Are Available And Why Might A Marine Mortgage Be The Better Option
Business owners may consider drawing funds from their business and though this may be fine for some, there will be others who have taken advice who feel this is not the best solution. This could be because it is not the most tax-efficient method and that it would be wise to ensure the business is protected with reserves whilst also keeping the option open to move quickly to take advantage of future business investment opportunities.
A final option to raise funds to buy a boat could be to raise funds against property. This could well result in a comparatively good rate of interest, but then looking at the bigger picture it could restrict further funds being raised to make home improvements or even restrict a move to the next house.
We are delighted that the boat sales market enjoyed a resurgence in 2021 and as long as the supply of boats can keep up with demand, then 2022 is already looking to be another strong year for boat sales. For those starting to research their next boat for the season ahead, why not get in touch with one of our marine finance specialists and they will be happy to assist with your enquiries.
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Bank Of The West Boat Loans
Types of boats financed: Boats must be model year 2001 or newer to be eligible. Bank of the West specifically says that it finances standard or custom power or sailboats, multi-hull boats, pontoon boats, and electric boats. The lender also offers loans for high-performance boats, houseboats, and wood hull boats. However, it does not finance boats that can exceed 99 miles per hour.
Loan amounts available: $10,000 and up for new and used boats, $25,000 and up for live-aboard boats. Loans over $2 million are available.
Watch out for: Credit score requirements. Bank of the West states on its site that it lends only to people with credit scores of 700 or higher.
Boat loans through Bank of the West and its lending division, Essex Credit, are a good option for people planning to get a boat loan of $50,000 or above.
A $10,000 boat loan with Bank of the West would have a starting interest rate of 8.89%, a $15,000 boat loan would start at 8.39%, and a $50,000 loan starts at 4.29%. While their rates for loan amounts over $50,000 are competitive, anyone looking for a smaller loan may find a better rate with LightStream.
It’s worth noting that this lender does have a loan processing fee that could add to your total cost of borrowing. A 10% down payment is also required for loans between $10,000 and $200,000, and percentages increase for higher loan amounts.
4.29% to 11.89%
Loan amounts available: $100,000 to $2 million
