Commercial vessel refinancing is more common than many operators realise. Refinancing replaces your existing marine finance agreement with a new one - from the same or a different lender - on potentially better terms. The most common reasons to refinance a commercial vessel include: securing a lower interest rate, releasing equity from a vessel that has been paid down, replacing an upcoming balloon payment you cannot easily fund, and extending the term to reduce monthly payments during a cash flow squeeze.
Reasons to Refinance Your Commercial Vessel
Lower Rate
If market rates have fallen since you took your original finance, or if your business credit profile has improved, refinancing can reduce your interest rate and monthly cost. Even 1% rate saving on a £500,000 facility saves £5,000 per year.
Release Equity
If you have paid down your vessel finance significantly, or if the vessel has increased in value, refinancing can release capital for reinvestment - new equipment, another vessel, or business working capital.
Replace Balloon Payment
Many commercial marine HP agreements include a balloon payment at the end of the term. If you cannot easily fund this from working capital, refinancing the balloon into a new agreement spreads the cost.
Change Lender
If your existing lender's service or appetite has changed, or if they have applied additional covenants you find onerous, refinancing to a new lender provides a clean break.
Step-by-Step Refinance Process
- 1Step 1 - Settlement figure: Obtain an up-to-date settlement figure from your existing lender. This is the amount required to pay off the existing agreement in full.
- 2Step 2 - Vessel valuation: DBF will assess current vessel value (using surveyor reports, market comparables, MCA survey certification). This determines how much equity exists above the settlement figure.
- 3Step 3 - Refinance objective: Confirm what you want to achieve - same balance at lower rate, increased facility, extended term, balloon replacement, or equity release.
- 4Step 4 - Lender identification: DBF identifies lenders with appetite to refinance your specific vessel at your required amount, considering vessel age, type and LTV.
- 5Step 5 - Application: DBF packages the refinance application - settlement figure, vessel survey, current business accounts, MCA coding evidence.
- 6Step 6 - Offer and comparison: DBF presents the best refinance offer. You compare total cost (rate, term, fees) against your existing facility.
- 7Step 7 - Completion: New lender pays off existing agreement. New finance commences on new terms.
Refinance Rates for Commercial Vessels - October 2026
| Vessel Type | Refinance Rate Range | Max LTV (Refinance) | Notes |
|---|---|---|---|
| Fishing vessels (under 10 years) | 7.5%–10.0% | 75% | Fishing licence required |
| Fishing vessels (10–20 years) | 8.5%–11.5% | 65–70% | Strong survey essential |
| Ferry/passenger vessels | 7.0%–10.0% | 70–75% | MCA passenger certificate required |
| Offshore/CTVs | 7.0%–10.0% | 70% | Charter contracts support case |
| Workboats/tugboats | 7.5%–11.0% | 65–70% | MCA coding required |
| Equity release refinance | 8.0%–12.0% | 65–70% | Higher LTV = higher rate |
Key Considerations in Commercial Vessel Refinance
- Early redemption penalty: Check whether your existing agreement imposes an early redemption or early settlement charge. These charges can offset or eliminate the benefit of refinancing to a lower rate.
- Lender arrangement fee: New lenders typically charge an arrangement fee (0.5–2% of facility). Factor this into your break-even calculation.
- Vessel age at end of new term: The new term cannot take the vessel beyond lender age limits - e.g., if the lender restricts to vessels under 25 years, a 20-year-old vessel can only be refinanced for up to 5 years.
- Business accounts: Refinancing requires current business accounts (typically last 2–3 years) just like an initial purchase. If your accounts have deteriorated since the original purchase, discuss this with DBF before applying.