Can you get a mortgage on a narrowboat?

If you've ever dreamed of living on a narrowboat, cruising along the UK's beautiful canals, or simply enjoying a life of adventure, you might have wondered whether you can get a mortgage on a narrowboat. It's an exciting idea, but it can also feel a bit intimidating if you don't know the ins and outs of how to finance your dream boat.

The good news is that you can get a mortgage for a narrowboat! But securing a loan for a boat is different than getting a regular property mortgage. In this guide, we'll explain everything you need to know about narrowboat mortgages, how they work, and how to get one. Whether you're wondering if it's possible to finance a boat or already looking at your future narrowboat, we've got you covered.

What is a narrowboat mortgage?

A narrowboat mortgage (also known as a marine mortgage) is a loan specifically designed for buying a narrowboat. It's very similar to a traditional mortgage in that you borrow money from a lender to buy the boat, which acts as collateral for the loan. But unlike a property mortgage, where you borrow money to purchase a house or land, a mortgage for a narrowboat is tied to the boat itself.

Narrowboat mortgages are available through certain specialist marine lenders and can usually be used to finance boats up to around 25 years old, though this can vary depending on the lender. In general, a narrowboat mortgage can be used to purchase both used and new boats, though it's a good idea to make sure the boat you're buying is in good condition since the lender will want to know the boat's value before approving the loan.

Can I get a narrowboat mortgage?

Getting a loan for your narrowboat can be done as long as you meet the lender's criteria and the boat meets their requirements. But it's important to understand that not all lenders offer narrowboat mortgages, and the process can be a bit more complex than applying for a mortgage for a house.

There are a few key things to keep in mind when considering getting a mortgage for a narrowboat. As well as the financial aspects of the mortgage, boat ownership comes with its own unique set of responsibilities, which we'll cover later in this guide.

How do narrowboat mortgages work?

Narrowboat mortgages work very similarly to traditional mortgages in their basic structure. Here's a quick rundown of how they normally work:

• You borrow money from a lender: Just like a home loan, you’ll borrow money from a bank or marine lender to buy the narrowboat.
• The loan is secured against the boat: The boat acts as collateral for the loan. If you fail to make repayments, the lender can repossess the boat.
• Repayment terms: You’ll agree to repay the loan over a set period of time, usually 10 to 15 years for a narrowboat mortgage, although this can vary.
• Interest rates and deposits: Interest rates for narrowboat mortgages tend to be higher than regular property mortgages because boats are considered riskier assets due to depreciation. You'll also likely need a larger deposit, usually around 10-20% of the boat's purchase price.

Usually, the lender will need a boat survey to assess the value and condition of the narrowboat before approving the mortgage. This is important because the lender wants to ensure the boat is worth the loan amount.

Regular Mortgage vs. Narrowboat Mortgage: What’s the Difference?

So, how does a narrowboat mortgage differ from a regular property mortgage? There are several important differences to be aware of:

1. Asset Type (Property vs. Boat)

The most obvious difference is the type of asset you're financing. With a regular mortgage, you're buying a house or property, which tends to hold its value (or appreciate over time). In contrast, a narrowboat is a vessel that usually depreciates over time. Lenders understand that boats are less stable investments, which is why the terms can be different.

2. Interest Rates

Interest rates on narrowboat mortgages tend to be higher than those for regular mortgages. This is because boats are seen as more at risk in terms of their depreciation and potential for damage from weather or accidents.

3. Loan Term

Mortgage terms for narrowboats are usually shorter than those for traditional homes. A regular property mortgage can last up to 30 years, whereas narrowboat mortgages usually range from 10 to 15 years. This means your monthly repayments for a narrowboat mortgage might be higher than a property mortgage, but the loan term is shorter.

4. Deposits

Regarding the deposit, narrowboat mortgages usually need a larger upfront payment. While you might be able to get a regular mortgage with a 5-10% deposit, for a narrowboat mortgage, lenders often ask for at least 10-20%. The reason for this is that narrowboats are considered riskier than property investments.

5. Maintenance and Condition

Unlike a house, the condition of a narrowboat can depreciate much quicker if you do not carry out frequent narrowboat maintenance and checks. Lenders often look for boats in good condition and may want a recent survey to verify the boat's value.

With a home mortgage, the structure and condition of the house are important, but a boat's seaworthiness, engine condition, and maintenance history are even more important.

Steps to Get a Mortgage on a Narrowboat

Now that you know the basics of how a narrowboat mortgage works and how it differs from a regular mortgage, let's look at the steps you'll need to take to get your own mortgage for a narrowboat.

Step 1: Research Lenders Who Offer Narrowboat Mortgages

Not every lender offers narrowboat mortgages, so your first step is to find the right lender. Look for banks or brokers who specialise in marine lending or boat finance. There are several companies that focus specifically on boat loans, and they’ll have the expertise to guide you through the process.

Step 2: Get Your Boat Surveyed

Before applying for a narrowboat mortgage, it's a good idea to have the boat surveyed by a professional. This is an important step because the lender will often need an independent valuation of the boat to ensure it's worth the amount you want to borrow. The surveyor will check things like the boat's condition, its age, and its systems (engine, electrics, etc.). A survey can cost a few hundred pounds but is well worth the investment to avoid any surprises down the road.

Step 3: Prepare Your Financial Documents

Just like applying for any other mortgage, lenders will want to assess your financial situation to ensure you can make the repayments. Be prepared to provide documentation like:

• Proof of income (payslips, tax returns, etc.)
• Bank statements for the last few months
• Details of any existing debts or financial commitments
• Your credit history and score

The lender will use this information to decide whether to approve your mortgage and on what terms.

Step 4: Submit Your Application

Once you’ve found a lender and gathered your documents, it’s time to submit your application. The lender will review your financials, assess the value of the boat, and check that you meet all the necessary requirements. If everything checks out, they’ll approve the loan and provide you with the funds to buy the boat.

Step 5: Buy and Enjoy Your Narrowboat!

Once your application is approved, you'll receive the funds to buy your narrowboat. It's time to set sail (or at least start living your canal-side dream). Remember, the mortgage repayments will begin once the loan is approved, so keep track of your payments to stay on top of your finances. With the right preparation, you could soon be living your best life on the water.

Specialist Narrowboat Insurance Through Insure4Boats

Once you are the proud owner of your new narrowboat, you may want to protect it through specialist narrowboat insurance.

At Insure4Boats, we arrange cover that protects your boat against theft, accidental damage, malicious damage, and salvage charges.

Each policy comes with £3m Third Party Liability cover as standard, so you’re protected if someone makes a claim against you for damage or injury to their boat following an incident on the waterways.

Find out more about specialist narrowboat insurance or get a quick online quote today.