Obtaining a marine mortgage tends to largely mirror the process of applying for and receiving a home loan. Both are secured loans and as such the mortgage will be registered against the vessel.
The first thing to consider is “What can I afford to borrow?”. This will largely depend on how much you intend to borrow over how long. Both these variables will be governed by the cost of your dream boat, it’s age and the amount of cash you can put down.
In many cases lenders will require a deposit of 30% down and many marine mortgages are fixed term of say 10 years. If you are looking to buy a particular type of boat or an older boat the loan period or deposit required may vary.
After you have established roughly how much you can borrow, and what you are looking to buy, it’s important to make sure you shop around, both for a selection of suitable vessels but also for the most competitive loan available. Brokers can be a good source of information here and they may be able to advise you on any restrictions that come with a marine mortgage.
Using an Equity Release Loan might be an option and this will have the added benefit that you will probably be borrowing money as cheaply as you can, via a loan secured on bricks and mortar. Of course, failing to repay that loan may result in you losing both your boat and your home!
Do the maths! Make sure you properly allow for costs like berthing, insurance, maintenance, anti-fouling and lifting, the replacement of sails and sail covers and the updating of charts and servicing of safety equipment such as life rafts, EPIRBS and gas installations.
Remember VAT! If you are buying a boat and intend to keep it in the EU remember VAT. Some boats are berthed outside the EU and are not VAT-paid. If you import your vessel you may end up having to pay a large sum of VAT - be careful and take specialist advice.
Get it surveyed! Never buy a boat without a survey. Of course, if you are borrowing money to buy it then the mortgagee is going to insist on a survey, but why wouldn’t you anyway? Buying a boat can be a bigger headache than you might think, and that’s without the added costs and hassle of buying ‘a pup’!
Make sure you understand all the terms of your marine mortgage. Are you allowed to leave domestic waters? Can you use the boat commercially, can you charter the boat out? Are there minimum manning requirements that must be met to keep insurance valid?
It’s regularly quoted that the best two days of boat ownership are the day you buy it and the day you sell it. That’s probably a little pessimistic, but if you are borrowing money to afford this large luxury, make sure you do your homework first!