Hull Yeah!

Financing a Boat in the Mediterranean as a US Citizen

The reality is it’s extremely complicated.

  • US Banks don’t want to loan on an asset that’s out of their jurisdiction.
  • European banks don’t want to loan to citizens, outside of their jurisdiction.

What are the options to explore, and what did we do?

  • Boat loan: where the boat is the asset.
    • Initiated from a US based lender.
    • Imitated from an EU based lender.
  • Personal loan: where you establish a personal guarantee with your lender.
  • HELOC: (Home Equity Line of Credit) where you borrow against the value on your home.

Exploring some pros and cons:

Boat Loan

Pros

  • The boat is the asset, putting it to use
  • Lower interest rates that can be 1/2% or more
  • Possible deals to be had with the boat manufacturer if you’re buying a new boat. Although, you can also negotiate the price of the boat, as they’re paying for the discounted rate.

Cons

  • Will need to bring the boat back to US waters within 6 months.
  • 20% down payment, requiring you to get funds from somewhere else
  • Principal & Interest payments, requiring higher monthly payments, when you may not want to pay it down
  • Slightly more complexity with insurance and registration as the lender will need to be named. Simple for insurance, slightly more complicated for registration the vessel
  • Near impossible to get if you’re a citizen in one country (US) and purchasing a boat in, or staying in Europe

Ultimately, unless you can satisfy the transport to the US option, or you have a business entity in Europe, this is likely not an option. I spoke with at least 5 different lenders that said they could loan us funds, but they ultimately came back and said we either need to bring the boat back in 6 months or have a business entity in Europe.

HELOC

Pros

  • Can finance 100% of the boat, assuming you get approved for the full amount.
  • Interest only payments as an option to decide when you want to pay more, paying down the principal
  • Can use the HELOC funds to purchase additional items, as the funds are your funds to use, not limited to a specific purchase
  • Can pay down the loan, as you have extra funds, and can draw back from it.
  • Quick closing: depending on your lending institution, it can close in a week or a few.

Cons

  • Need an asset you can get a HELOC on.
  • Slightly higher rate, ~ .5% as the HELOC is likely in second place to your primary mortgage.
  • Additional closing costs. This is a home loan, so you’ll need to do all the title work and all the other bits that add up. Don’t accept their first bid, ask them to negotiate the fees. We reduced our fees by ~1,200, simply by asking.

What We Chose – HELOC

We chose the HELOC option as it gave us the greatest flexibility. The HELOC was on a multi-family property that we rent 2 units for the last several years, allowing us to write-off the interest rate, which offsets the slightly higher rate.

It allowed us to finance 100% of the boat costs, and all the commissioning, surveys, flights, and boat stuff. We didn’t need to pull all the funds out immediately. A HELOC is a line of credit you draw on.

Interest only payments, which enable us to decide when we want to pay down the principal. In this market (spring of 2025), not having to pull money out of the market, and borrowing against the painful wait till the market recovers provides flexibility.

We were introduced to Lafayette Credit Union who had the best rates, and were able to close in 10 days. I spent far more time shopping around, only to come back to them. They’ve been fantastic, highly recommended.

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