Marine Mortgages - Deposit Security

So, you have all your paperwork in place having applied for your marine mortgages, and been approved by one of the lenders. All the other paperwork is in progress and you decide to leave a deposit on the boat, to secure the sale. Is your money safe?

In simple terms the answer is no, as the broker or manufacturer may go bust. If you are buying a large yacht then your deposit could well exceed £50,000 or  £100,000 - a significant amount of money for anyone to lose, and in the current economic climate more and more yacht brokers and manufactures are likely to find market conditions extremely tough in the next 2 -3 years in the UK ( if not throughout Europe ) It is certainly a buyers market at the moment which is the good news.

So what actually happens to your deposit and are you protected?

Marine Mortgages - British Marine Federation

As things stand at present, there is no legislation in place to either protect your deposit in the case of a company going into administration, such as in the recent Peters Opal case, or indeed to ensure that the deposit is segregated into a client account. So in simple terms your deposit may well be used by the broker to support the business, or by the manufacturer to purchase materials and pay the staff.  Segregation of client funds is standard in many industries such as the legal profession, investing and trading, accountancy etc, and yet in the retail leisure industry, there is virtually no protection whatsoever. Worse still there are no compensation schemes set up by the industry should the worst happen, such as in the travel, airline, or insurance industries.

The best that you can hope for is to buy your boat from a broker who is a member of the British Marine Federation, although the new regulations are suggested guidelines only, and therefore not mandatory, but self regulatory. In essence the guidelines advise that client money should be held in a separate account. The system relies on brokers declaring annually that this is in fact the case, so even here you have no guarantee that your deposit is safe.

If your deposit is large and you are concerned ( as I would be ) about the safety of your deposit, then I would suggest you set up an ESCROW account with your bank, or alternatively ask the broker for the funds to be held by a solicitor and released on completion and delivery of your boat. This happens in the property world, so why not in the boating world ? - it's your money so why not protect it as much as possible. The broker or dealer may not like it, but at least you will have the comfort of knowing your money is safe. Finally ask your marine mortgages provider if this is a facility that they could provide for you, or if they have any other suggestions - they are all very helpful so it's worth asking!

That's about all you need to know when buying your new boat! - we hope you found this site both useful and informative, and that it helps you to enjoy your new boat to the full. As a specialist marine finance company we are always adding new suppliers and services to our portfolio so please check back regularly, or simply ask us if you cannot see a solution for your particular requirements. We look forward to finding you some competitive marine mortgages for your new yacht, and thank you in advance for using our services. We look forward to welcoming you as a client  - kind regards, David & Anna Coulling - Marinablu International Ltd for competitive marine mortgages.

Marinablu International Ltd is an Introducer Appointed Representative of DeNovo Underwriting Agencies Ltd. DeNovo Underwriting Agencies Ltd is Authorised and Regulated by the Financial Services Authority (FSA)