Do you need a home loan for a houseboat?

Waking up to the sound of waves gently lapping against the side of your home may seem like bliss to some, but financing this floating fantasy with a mortgage may prove somewhat difficult.

Despite being utilised as a home, a houseboat is unlikely to qualify for a mortgage in Australia. Home loans are generally reserved for fixed property. If you’re looking to borrow to buy a houseboat, you’ll more likely need to secure a personal loan.

Most lenders would not consider an owner-occupied houseboat for a mortgage due to a number of factors:

• The “home” or asset will not be permanently established on a block of land (ineligible for land registry)
• The loan-to-value ratio (LVR) may not meet lender requirements
• The life expectancy of the asset versus the duration of the loan term

While a home loan may not be a viable option, you may be able to borrow the money needed to finance your purchase via a secured or unsecured boat loan.

If you choose a secured loan, one that has either the boat or another asset you own as collateral, you are more likely to be offered a lower interest rate. This is because the lender will have the guarantee that, should there be a problem with repayments, the boat or other asset could be sold to pay off the outstanding amount. If you opt for an unsecured loan, interest rates will generally be higher as the lender will have no absolute guarantee of being paid back. It's also possible that you may be approved to borrow more with a secured loan.

What are the features of a boat loan?

Fixed or variable interest rate

Loans with fixed rates require regular, defined repayment amounts. However, if you’re on a variable interest rate your repayments may fluctuate depending on interest rate movements.

Extra features

There may be certain loan features that are appealing to you, such as the option to make unlimited extra repayments or having access to a redraw facility. Keep in mind that some credit providers may charge for use of these features.

Fees and charges

Most loans aren’t simply made up of principal and interest repayments. The overall cost of the loan could include a variety of ancillary charges. That’s why RateCity displays a comparison rate as part of all featured loan products. This rate incorporates the fees you’ll pay, together with the interest you’ll owe.

Some of the most common fees include:

• Establishment fees
• Ongoing monthly fees
• Late payment fees
• Redraw fees
• Early repayment fees

How much can I borrow to buy a houseboat?

Most personal loans have a minimum loan amount of around $1,000, while maximum limits can often be more flexible. It's important to do your research to find out which lenders may offer the loan size you want.

Lenders will consider your income, credit score, and whether you're applying for a secured or unsecured loan when deciding how much they are willing to allow you to borrow.

You may also want to contemplate where you might moor or dock your houseboat, as this is likely to be an ongoing cost and you may not be able to use your loan’s funds to pay for this. Other additional costs may include fuel, maintenance and repairs, registration fees and boat licensing fees.

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