Boat Loan Finance
In general there are four principle types of
boat loan finance available,
all of which
will vary from lender to lender. Whilst the general broad types of marine
mortgages may be similar, the terms and conditions can vary significantly,
and it is as a specialist marine finance broker that we work on your behalf
to find the best deals available to suit your particular requirements.
The main difference with marine mortgages, as compared to other more conventional mortgages, is that there is only one type available, and that's a repayment. Interest only boat loans are simply not an option, as the underlying asset ( the yacht) is decreasing in value, sadly, so to offer an interest only finance model would be impractical. However, having said that, some boat finance companies do offer the option of an interest only facility, but only in the first or second year, with the mortgage then subsequently reverting to a repayment thereafter. The marine finance itself is secured only on the vessel in question, not against your house, so in the event of defaulting on your repayment, the finance company has title to your boat and can repossess it at any time.
With our experience we generally know where to obtain the best boat loan rates, the longest repayment periods, or more specialised facilities such as a boat loan in an overseas currency. Quotes are generally provided within a few hours, so within a day or so you should have several quotes to compare. So let's look at the different types of marine mortgages available.
Boat Loan Rates
As the name suggests, variable rate boat loans are variable, and linked to the FHBR rate which stands for the Finance House Base Rate. This is a lending rate which is established for members of the Finance and Leasing Association so that a standard rate is established for them to calculate and quote interest charges to customers. The rate is calculated and set on the last Friday of each month, and is based on LIBOR which is the inter bank lending rate at which banks lend money to one another. With a variable rate marine mortgage, your repayments will go up and down in line with interest rate fluctuations. With variable rate marine mortgages lump sum repayments can be made at any time with no penalty. The term of the loan will remain fixed as any interest rate variations are accounted for with higher or lower payments accordingly. So a ten year marine mortgage will be paid off in ten years, but your monthly repayments may have varied throughout the period as Bank of England and LIBOR rates fluctuated during the loan period.
Balanced Payment Plan
The balanced payment plan boat loan is one of the most popular yacht finance facilities available. As with the variable rate mortgage it is linked to the FHBR rate, but this time, the monthly repayments remain fixed throughout the period of the agreement. This allows you to budget more easily. However, unlike the above, the term of agreement will vary, so if rates fall, then you will pay off your marine mortgage earlier ( hurrah!) and if they rise then it will take longer. So with a ten year marine mortgage, if rates fell, then you could find that you have paid the mortgage in 9.4 years, whereas if rate rise, this could increase to 10.8 years for example.
Buy A Boat - Low Start & Interest Only
As the name suggests, a low start marine mortgage facility gives the option of low monthly repayments in the early stages of the mortgage period. Generally this facility is limited to the first and second years only. In the following years monthly repayments then increase slightly annually, in order to ensure that full repayment is achieved over the agreed term. A variation of this type of marine mortgage is the interest only option. In this case, only the interest on the capital is repaid in the early years, and none of the capital, which equates to lower monthly repayments. Following the interest only period, then monthly repayments increase annually to allow for repayment of both the interest and the capital within the agreed term of the marine mortgage.
Boat Finance Currency Mortgages
Marine mortgages established in a foreign currency, can provide an excellent alternative, as they offer both protection from currency rate fluctuations, and the opportunity to use more advantageous interest rates. If you are paid in a foreign currency such as Euros or US dollars, then this type of marine mortgage may be for you. As an example we recently completed on a mortgage for a US citizen working in the UK ( and buying his yacht in the UK), but paid by his American company in US dollars. As a result we were able to structure the marine mortgage in US dollars with an associated low US interest rate, saving the client a considerable sum over the term of the loan. Both the Euro and US dollar facility are linked to the one month LIBOR rate.
Personalised Boat Loan Packages
Depending on the amount you are looking to borrow, and your personal credit score and history, we may be able to find structured repayment options, tailored to your specific requirements. These can include a balloon payment at the end of the term, or an annual review marine mortgage where terms of the loan are reviewed each year and adjusted accordingly.
So now you understand all the types of marine mortgages available - let's get you a quote!.
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)