Financing a houseboat in Australia

When it comes to financing, houseboats are generally considered more ‘boat’ than ‘house’. Home loan lenders probably won’t provide a mortgage for a houseboat. A home loan is secured against the title of the property it's used to buy, which typically includes some claim to the land it sits on, after all.

Houses and apartments are is far less likely to sink, breakdown, or be stolen than a houseboat, meaning they carry less risk. Not to mention, boat values typically depreciate, meaning a lender might struggle to recover their losses in the event a borrower defaults on a loan that uses a houseboat as security.

That's not to say the idea of getting a loan for a houseboat purchase doesn't hold water.

How can you finance a houseboat purchase?

There are plenty of financing options available for those seeking the unique lifestyle. Perhaps the two most common ones include: 

• A secured personal loan

• Accessing home equity through a mortgage

Using a personal or ‘boat loan’ to buy a houseboat

Perhaps the most obvious financing solution that can be used to buy a houseboat is a personal loan, with some lenders even offering personal loans that are dubbed 'boat loans'.

Features of a secured personal loan

• Uses an asset as security of the loan
• Typically offer lower interest rates than unsecured loans
• Commonly must be repaid within seven years
• Can often provide a borrower with $100,000+ 

A person taking out a personal loan to buy a houseboat could use that houseboat, or another asset, as security. If they fall behind on their repayments, their bank or lender could repossess the houseboat in order to minimise its losses. 

By providing a secured personal loan, a lender is taking on less risk than if they were to hand out an unsecured personal loan, and therefore the interest rate on the loan is likely to be more competitive. 

For the same reason, banks and lenders will typically lend more funds through a secured personal loan than they would through an unsecured personal loan. For instance, CommBank lends up to $120,000 through a secured personal loan, while the maximum for an unsecured loan is $50,000.

Many personal loan products offer similar features to home loans, like redraw facilities and offset accounts.

Using home equity to buy a houseboat

If you’re already a homeowner, you might have another financing option that you could use to buy a houseboat. You could feasibly access the equity within it to pay for a houseboat.

How would that work in practice? Let’s use an example.

If you’re expecting to spend hundreds of thousands on a houseboat, tapping into your home’s equity could be a more fruitful endeavour than trying to borrow such an amount via a personal loan. 

Though, it’s worth remembering that lumping the cost of a houseboat into your home loan has the potential to increase the life of the loan or your repayments (or both). While mortgages generally offer lower interest rates than personal loans, their longer lifespans can mean a borrower ends up paying more interest overall. 

How much do houseboats cost? 

If you’re considering buying a houseboat, you might be pleasantly surprised to learn many are priced at a similar point to boats than houses. 

While it’s possible to find houseboats priced at over $1 million, there are plenty of decent options on the market for a few tens of thousands of dollars. 

Though, comparing one houseboat to another can be like comparing apples and oranges. From the inside, some could be confused for a modern apartment, while others are more akin to a floating caravan. 

That is to say, there are houseboat options to suit most budgets and lifestyles out there.

_{Image by Zac Edmonds on Unsplash}