Navigating the different financing options for your boat isn't always plain sailing



Let’s be honest, who doesn’t dream of owning a boat? But for many of us, even if we can imagine casting off the lines and sailing into the sunset, a look at boat prices can make that dream seem like just a  fantasy.

For those of us without the deep pockets needed to buy a boat with cash, turning your visions of captain-hood into reality will require some help. Boat financing can make it possible for aspiring skippers to purchase vessels they couldn’t otherwise afford.

With a boat loan or mortgage, you can buy your dream boat and spread the cost over several years, making the jump from landlubber to sailor much more realistic. And, just like boats, marine financing options come in all shapes and sizes, from different vendors, and with different interest rates, terms, repayments, deposits, and collateral requirements.

So, whether upgrading or casting off for the first time, avoid one of the biggest boat buying blunders and consider how you will finance your boat before you get your heart set on something that may be out of budget.


Types of boat finance


Unsecured loans


Arguably one of the easiest ways to finance a boat purchase (other than paying with cash, of course) is with an unsecured loan. This involves borrowing money from a lender over a fixed term with a fixed interest. Because there’s no collateral, you may find interest rates are higher vs a secured loan (which we’ll cover below), and the loan’s term length may be less.

However, the benefits are that you can use the cash for anything you like – so the money can go towards the purchase, extras like lifejackets and dinghies, repairs, transport, or anything else you might need. This also gives you more flexibility when buying your boat, as the lender won’t impose limitations on the condition, age, or type of boat you can buy, and they can’t repossess your boat if you miss a repayment (although there will be other consequences, such as a negative impact on your credit score). Plus, you can usually take out an unsecured loan from your regular bank, so you don’t need to find a marine finance specialist to help make your dreams a reality.


Secured loans (aka boat mortgages)


When talking about ‘boat loans’ or ‘marine mortgages,’ chances are you’re discussing a secured loan. This is a type of loan that involves putting up the asset you’re buying (in this case, the boat) as collateral against the loan, so the lender has more security should you default on your repayments.

Boat mortgages do have drawbacks, as lenders are likely to want a lot more detail on the value and condition of the boat you’re looking to purchase. They might also require additional information before approving the loan, such as boat surveys and proof of previous owners. If you don’t repay your boat loan as per the contract, the lender may also be able to repossess your boat.

Despite the extra hurdles, secured boat loans can be preferable vs unsecured loans, as they will often offer a lower interest rate and longer term, meaning the amount you pay back each month is likely to be lower. You may also be able to take out a larger sum, giving you a bigger budget for boat shopping!


Not all boat loans or mortgages require a survey, so be sure to check the necessary paperwork required

Release equity in your home


If you own your house, have enough equity (aka, you’ve paid off enough of your mortgage vs the property’s value), and your current repayments are manageable, you might be able to secure more affordable and attractive interest rates by taking out a loan tied to your house, rather than your new boat.


Taking out a homeowner loan for your boat offers the benefits of an unsecured loan, as the lender isn’t likely to care what you spend the money on (the boat, extras, repairs, transportation, etc.), you don’t need to worry about your boat being repossessed, and the lender won’t need to be involved in the boat buying process. Meanwhile, you obtain the best rates and potentially bigger sums to spend on your next vessel.


The downside, of course, is that it would involve remortgaging part or all of your home, which might not be an attractive option. You’ll also have to prove your income and your current mortgage provider will need to consent to the additional charge on your home. And, of course, although they won’t be able to repossess your boat, your house could be at risk if you don’t keep up repayments.



Shared ownership & boat membership schemes


If you don’t plan on using the boat very often or the cost of owning a boat is daunting, a shared ownership scheme might be the perfect compromise. With these schemes, you would own a portion of the boat and share it with others. This doesn’t just help with financing the initial cost of the boat, but would also involve splitting other costs, such as maintenance, mooring, repairs, etc.


If you have a group of friends who are also interested in boat ownership, you might be able to simply buy a boat together and agree to split the costs. Just be sure to put your agreements in writing, as boating can be stressful, particularly when sharing a boat, and it’s worth agreeing up-front how things like general maintenance, big repairs, and time spent on the boat will be divided.


If you don’t have a pre-made group of friends to share with, you might be able to take part in a fractional boat ownership membership scheme. There are two common business models to be found here. In one, each member has a stake in the vessel, much like the informal agreement when sharing with a group of friends. In the other, one person owns the boat, while others pay a monthly fee for the right to use it for a pre-agreed number of days.


Whether your next marine investment is to purchase or charter, getting on the water is the goal



Leasing with option to purchase


Leasing a boat is another simple way to buy your next boat if you don’t have enough cash. However, boat lease products aren’t available in the UK. So, this is only an option for those of you looking to buy abroad (if this is you, don’t forget to check out our article on buying a boat in the Mediterranean).

In countries where this boat finance option is available, the lender will buy your chosen boat for you. You’ll then “rent” it from them for a price and timeframe agreed up-front. At the end of the contract, you can buy the boat if you want to.


Rent a boat


If you’re still unsure which marine finance option is right for you but can’t wait to get on the water, you might consider renting a boat. From cruising a canal boat down the river, to spending a few nights on the water with rentals from Airbnb, there are loads of ways to get your boating fix without actually buying a vessel yourself. Before hiring a boat, please check whether you’re allowed to move it; not all will be licensed for adventure holidays!

If your idea of spending time aboard wouldn’t be right without throwing off the lines and feeling the wind in your hair, you could also charter a boat. There are loads of chartering options in the UK and abroad, with or without a crew, making this the perfect way to enjoy the boating life without the commitment or cost of owning a boat yourself. Please note that you will need a sailing qualification or licence to take a charter boat out without supervision!

Read more about buying your first boat in our feature Buying a boat: first-time buyers’ guide. For more related reading, check out the below articles:





Written by: Pippa Shaw
Pippa is a freelance copy and content writer living on her 28-ft sailing yacht with her partner and boat cat, Opie. As a full-time liveaboard and digital nomad since 2019, Pippa’s got plenty of nautical miles and boat renovations under her belt and is currently completing a UK circumnavigation before setting her sights on warmer waters.