Boat finance

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richardh10

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With a few hours to spare this afternoon I thought I would check out some finance for my next mega yacht.

In the course of the conversation I was told I would need a survey ( no probs), and the surveyor would value the boat. Really? I wouldn't have thought they would touch a valuation with a barge pole.

So, do they, or can you specifically ask them to?
 
On last survey we had done we asked for his opinion on the valuation and he gave it although not in writing as no finance.

Can't see it being much more use though than a drive-by valuation on property purchase. i.e. a basic confirmation that the boat you are buying with borrowed money is somewhere in the same ballpark. No £500k loans secured on a £50k boat.

The Surveyor will know what the offer is and what the asking price and will probably confirm those unless he spots something fundamentally wrong.
 
Yes a surveyor is often required to value a boat for insurance purposes. To do this he will have access to data on achieved values of sales of similar boats in recent times (available from Yachtworld by subscription) together with any other knowledge he has of the market. As usual it will be expressed as an opinion just the same as if you got a valuation from a surveyor for a property or for a work of art from an auction house. Unlike a property though the quality and reliability of the information available is often poor so the valuation may be at variance with what the boat might sell for. Finance companies tend to lend much lower amounts such as 60% of valuation to recognise the fact that valuations are imprecise and the asset is rather more illiquid than many other assets. They found this out the hard way in the post 2008 period when they ended up repossessing boats that sold for less than the finance outstanding.
 
haydude said:
If you need finance, be sensible do not buy a yacht, the purchase cost is just the beginning.
As my old man always said: when you have the money to buy a Ferrari, buy a Fiat Punto instead. So I did, and when it was the time I could afford a yacht. But the same rule apply, when you have the money for an Oyster, buy a Bavaria instead. You will need the spare cash to actually maintain it and enjoy it without worries.
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On the flip side of that though - the OP may have high disposable income ( at the moment) and be easily able to afford the running costs and finance. If he waits to save up then he might lose 5 years of sailing. As the wise man said - Grab a chance and don't be sorry for a might have been.
 
Out of interest, sorry pure curiosity, what kind of APR do you get on a yacht these days?
Last time I looked, it was more than a house mortgage but much less than HP on a car.
 
Don't forget that a marine mortgage will require the boat to be Part 1 registered which can be a real *** on an older boat. A personal loan will be a couple of % points dearer but no need to jump through the Part 1 hoops if you don't have to.
 
lw395 said:
Out of interest, sorry pure curiosity, what kind of APR do you get on a yacht these days?
Last time I looked, it was more than a house mortgage but much less than HP on a car.
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It was around 10%, which seemed quite high , but the loan wasn't top loaded with interest, so if you could pay it off quickly, the interest wasn't that high
 
colind3782 said:
Don't forget that a marine mortgage will require the boat to be Part 1 registered which can be a real *** on an older boat. A personal loan will be a couple of % points dearer but no need to jump through the Part 1 hoops if you don't have to.
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Are you sure about that? - My last boat was purchased using a marine mortgage and it wasn't even on the SSR...
 
richardh10 said:
It was around 10%, which seemed quite high , but the loan wasn't top loaded with interest, so if you could pay it off quickly, the interest wasn't that high
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10%!!! Cripes, that seems seriously on the steep side for a secured loan. Sorry for more questions, but what kind of LTV was involved. I would have thought that much better terms could be found elsewhere, but am happy to be told otherwise.
 
Aardee said:
Are you sure about that? - My last boat was purchased using a marine mortgage and it wasn't even on the SSR...
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That's what Lombard told be when I bought Sargantana. As she was Spanish registered, getting her UK Part 1 registered would have been a royal PITA so I went with the bank. It meant 7% instead of 5% but I could live with that.

I could be wrong however...
 
colind3782 said:
That's what Lombard told be when I bought Sargantana. As she was Spanish registered, getting her UK Part 1 registered would have been a royal PITA so I went with the bank. It meant 7% instead of 5% but I could live with that.

I could be wrong however...
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Interesting, it may be that as mine was a UK boat with a full "local" paper trail they weren't so stringent? (it was Barclays Marine Finance).
 
jac said:
Then won't be a marine mortgage as can't be secured on the boat. Sounds like just a personal loan although maybe with some "marine" type branding
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Depends on the value and lender as to part 1 requirement. I have a marine mortgage with Lombard. They have the right to sell the vessel should I default on the payments, and they have the means to do so as they hold the original invoice, builders cert and bills of sale with their interest noted, along with a signed agreement from me giving them the right to do so in these circumstances. My boat is not part 1 registered, mortgage amount was sub £50k which if memory serves was relevant.

In terms of interest rates, mine is LIBOR linked and 4% odd.
 
jac said:
Then won't be a marine mortgage as can't be secured on the boat. Sounds like just a personal loan although maybe with some "marine" type branding
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Although it is common for finance companies to insist on being able to register their charge, alternative ways of protecting their interest as in post #14 may be acceptable.
 
dom said:
Sorry for more questions, but what kind of LTV was involved.
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Not sure what LTV means!

10% was actually 8% and libor linked, which brought it up to 9.5%. A personal loan would be cheaper, but only if you were going to pay it off over the complete term. Obviously the more you borrow the cheaper it is
 
richardh10 said:
Ahh! 70%. 30% deposit. Although I should imagine the value of the boat must be fairly subjective
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As I explained above, that is one way they limit their risk. 10 years ago the LTV would have been more like 80% or even higher on a new boat. Boats are relatively poor security - mobile, slow to sell and liquidation value uncertain.
 
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