Marine Refit Finance: How to Fund a Boat Refit in the UK

Why Refit Finance is Harder to Find Than Purchase Finance

Marine lenders are primarily in the business of funding vessel purchases. Their security is the vessel itself, and they are comfortable lending against an identifiable asset with a surveyed value. Refit finance is more complex: the security is a vessel mid-improvement, with value that may be lower during the works than either before or after, and the lender must trust that the work will be completed to a standard that justifies the borrowing.

This is why most standard marine HP and marine mortgage lenders will not fund a refit independently. However, several routes do exist, and the right one depends on the size of the refit, the borrower's existing equity in the vessel and the strength of their overall financial position.

Option 1: Hire Purchase (HP) on the Post-Refit Vessel

If you are buying a vessel and planning a refit immediately, some lenders will finance the purchase plus a portion of the projected refit costs, treating the finished value as their security. The key requirements are:

• A credible, itemised refit specification from a recognised boatyard
• A surveyor's assessment of the vessel's projected post-refit value
• The lender's LTV applied to the projected finished value

This approach works best when the refit is structural rather than cosmetic and when the boatyard has a solid reputation. Lenders such as Pegasus Marine Finance and Black Horse will consider this on a case-by-case basis.

Option 2: Unsecured Personal Loan

For refits up to approximately £30,000–£35,000, an unsecured personal loan from a high-street bank or specialist lender may be the most straightforward route. Personal loan rates for creditworthy borrowers currently sit at 6–12% APR over 1–7 years.

Advantages: no security required; quick to arrange; no survey needed; can be used for any type of refit work.

Disadvantages: limited to smaller amounts; rates are higher than secured finance; repayment terms are shorter, driving up monthly payments.

Option 3: Bridging Loan Secured on the Vessel or Property

For major refits (£50,000+), a short-term bridging loan is often the most flexible option. The loan can be secured against the vessel, against a residential or commercial property, or against both. The borrower takes the funds, completes the refit, then refinances onto a term marine mortgage at the improved vessel value.

How it works

1. 1Vessel surveyed pre-refit - surveyor also provides a "gross development value" (GDV) of the finished vessel
2. 2Bridging lender advances funds against the pre-refit value (or the GDV, depending on lender appetite)
3. 3Refit completed - typically 3–18 months
4. 4Post-refit survey confirms improved value
5. 5Refinance onto a term marine HP or marine mortgage at the new LTV

Bridging rates for vessel-secured lending are typically 0.85–1.5% per month, so cost control during the refit is important. The exit strategy (the refinance) must be clear and credible from day one.

Option 4: Staged Drawdown Refit Facility

A small number of specialist lenders and development finance providers will structure a staged drawdown facility for a marine refit. This works similarly to development finance in the property world: funds are released in tranches as work is completed and verified by an independent monitor or surveyor.

Which Lenders Will Fund a Refit?

Worked Example: £45,000 Refit on a 40ft Sailing Yacht

1998 Oyster 406 - Major Refit

In this case the borrower used £45,000 of bridging to fund the refit and exited onto a £77,500 marine HP at 6.2% over 10 years - releasing £32,500 of cash for other purposes while also owning a substantially improved vessel.