Owning a boat used to be the reserve of the rich, an unattainable luxury item. But there are now many Boat and Marine Finance options that can make a boat affordable within your budget. If you are asking yourself the question “can I afford a boat?”, the answer is now more likely to be “yes” than ever before.
A wide range of boat loans and financing, often known as marine mortgages, are readily available and the process of getting finance for new or used boats is now straightforward.
This post will help you understand the market for Marine Finance:
Marine mortgages and boat loans
A marine mortgage is a boat loan agreement where the borrowed amount is used to purchase a boat, where a lender takes security in form of a mortgage on the boat. These mortgage agreements typically range from two to seven years, with typical loan amounts ranging from £15,000 to £350,000. Interest and repayments tend to be fixed through the term of the agreement, with a deposit of between 10% and 20% typically being required.
Different lenders offer different terms on a marine mortgage, and this type of lending is not the only boat loan option on the market, although it is becoming an increasingly common choice. With so many options using an expert finance broker might be invaluable in finding the most cost-effective deal.
Similar to home mortgages, lenders offering marine mortgages (and other forms of marine finance) offer a choice of variable rate loans or fixed-rate simple interest loans. At the time of the agreement, a variable rate might appear low, but the “variable” aspect means it could change giving you higher repayments. Because of this a fixed rate loan is a simpler option, meaning you know where you stand throughout the repayment period. Rates vary widely, but you can expect to pay rates between 3% and 8% APR.
Other types of loan can have an average loan term of 10 years. It is always recommended to find the deal with lowest repayment term to fit your budget.
Boat operating lease
If being tied into the purchase of a boat is not for you, it is possible to take on an operating lease that will allow use of the boat while it is in use, but give you no ownership or obligation to complete full payment on the vehicle. In many cases, a financer buys the boat you have chosen and rents it back to you.
It is often possible to become the owner of the boat for a set amount (agreed beforehand) at the end of the contract.
Choosing a Marine Finance lender
It is clear there are many options to help you afford your dream boat, but who should you borrow from? The marketplace is wide and complicated, so you need to research as many different lenders (and their wide range of products) before settling on a lender.
Some packages include marine accessories and tax in the deal, allowing you to contribute a higher deposit and spread the set-up costs. Lenders will try and sway you with good interest rates or low repayment figures but hide costs or rate hikes in the fine print. To avoid these surprises, it is vital to read the fine print in detail to properly understand the terms in full. Brokers will help you navigate the marketplace for the best deal, complete the necessary paperwork and legal requirements to make purchasing a boat as hassle-free as possible.
With some research, it is possible to use Marine Finance to help you afford a boat that you never felt it possible to own before.