Mortgage on a canal boat (is it possible)

In this brief guide, we are going to discuss getting a mortgage on a canal boat and what considerations you should make when considering this kind of mortgage.

The idea of living on a canal boat can be much more appealing than living in a house. A house could start from £200,000 whilst a narrowboat can start from a little as £20,000.

The challenge with living on a canal boat is the initial expense of purchasing the boat and other fees such as :

• Mooring fees
• Sewage removal fees
• Council tax
• A safety certificate
• Boat insurance
• Boat license
• Council tax

Can you get a mortgage on a canal boat?

No, you cannot get a mortgage on a canal boat as a canal boat is not a fixed plot of land which you live on. If you want to buy a canal boat you can either do so with cash or through personal loans. There are also specialist finance providers for canal boats.

A canal boat loan will usually be as much as twice of what is charged on a residential property and the canal loan will usually need to be paid off within 5 years,

What to know when looking for finance on a canal boat

• APRs are usually higher
• You will usually need to put down a 54% deposit
• The loan terms for canal boat finance will usually be 5 years
• If you are buying a 2nd boat then you will usually need a permanent address which could be difficult
• There are specialist niche lenders in the market such as Roy Scot Larch
• The maxim amount you can borrow is usually £25,000
• You should carry out a boat survey before buying- this could cost as much as £400
• You will need a boat safety certificate which could cost £150
• You will need insurance. Third-party insurance could cost as much as £200 annually but contents insurance may be higher.
• Canal boat insurance could either be a fully comprehensive or third party
• You will need a boat license which could cost as much as £1200 for the year
• You will need a mooring spot which ould cost as much as £18,000 a year.
• You should try and get mooring as part of your boat purchase as it could be difficult to find a mooring location.
• You can buy a mooring location for as much as £500,000 and get a 99 year plus lease
• “ You can escape mooring costs if you do not stay in any once place for more than a fortnight and are classified as a ‘continuous cruiser’.”
• you’ll need fuel for both the engine and heating system and it’s worth noting that engines will use around a litre of fuel per hour of cruising
• You will need an annual engine service and a blacking of the hull every two years or so

Mooring deals

When buying a canal boat you will need to think about mooring. Mooring could significantly increase the cost of your canal boat purchase and its a fee you will need to pay each year.

In London, the cost of mooring is substantially higher due to the increased demand for mooring spots.

You can expect a waiting list of up to 5 years fora mooring spot in London and cost of up to £1000 per month. 

When buying a canal boat, some sellers will also offer you a mooring deal which you can also get finance for from some lenders.

Mooring can either be residential or commercial.

What is a residential mooring?

A residential mooring is one which allows you to remain and reside in one spot. You may be required to pay council tax and with a narrowboat, you can expect to fall into council tax band A which costs about £900 annually.

What is a commercial mooring?

A commercial mooring is one where the boats are primarily used for commercial purposes such as leisure and entertainment.

Government schemes for a mortgage on a canal boat

Unfortunately, you will miss out on the government schemes below due to the fact that you cannot use them on a mortgage for a canal boat.

They include:

• Lifetime ISA– gives you a government bonus of £1,000 if you save a maximum £4,000 a year.
• Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
• Help to buy equity loan– gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
• Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
• Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
• Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
• Right to buy– allows you to buy your home at a discount price.
• Preserved right to buy– same as above.

Right to acquire– similar to the above.

Depending on where you live, you may also have been able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.

FAQs: Getting a mortgage on a canal boat

In this brief guide, we are going to discuss getting a mortgage on a canal boat and what considerations you should make when considering this kind of mortgage.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.