Financing a houseboat in Australia

While many Aussies dream of a home among the gum trees, others wish for an abode on a billabong. 

And why wouldn’t they? Life aboard a houseboat offers a tranquil alternative to that found within land-based dwellings.

But how can one finance the purchase of a houseboat? Would they seek a mortgage or a boat loan? 

It’s a question that has likely stumped many water-loving Aussies. Thankfully, Your Mortgage has the answers you’re seeking.

How can you finance a houseboat purchase?

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.

After all, 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.

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, property prices tend to appreciate over time, while those of boats – houseboats included – typically depreciate. 

That's not to say the idea of getting a loan for a houseboat purchase doesn't hold water. 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 those intended to finance the purchase of water-faring vehicles often dubbed 'boat loans'.

Many banks and lenders don’t actually offer boat loans, but most do offer secured personal loans, which are the same product under a different name. 

Features of a secured personal loan

A secured personal loan is a personal loan that is secured against an asset. 

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

By providing a secured personal loan, a lender is taking on less risk than they would be in handing 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 $100,000 through a secured personal loan, while the maximum for an unsecured loan is $50,000.

Generally, a personal loan will have to paid back in a shorter time frame than a home loan. Personal loans typically carry a maximum lifespan of seven years.

Though, 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.

If you own a home, with or without a home loan, 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. 

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

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