Marine Finance

Corky

Corky

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22 Jul 2003
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Does anyone know of a good marine finance deal at the moment? The rates for loans and house mortgages are well publicised on web sites but marine mortgages all seem to need you to ring them up. Bank of Scotland are quoting 9.2% at the moment. not a very attractive rate with house mortgages running at the 3% mark.
 
I have £50k advance agreed with Lombard at 2.25% above FHBR - which from today is a total of 5.25%.

Lombard have no lower collar on FHBR deals but only offer balanced payment ageements so the mothly is fixed when you take the loan, with the term either lengthening or shortening depending on the IR fluctuation during the agreement.
 
Not sure why I would want to?

Why pay for my boat over 25 years when will only keep it 5. When you sell your boat, you have to remortgage again, incurring more fees etc etc. Your mortgage is for your home, not for your toys.
 
[ QUOTE ]
Not sure why I would want to?

Why pay for my boat over 25 years when will only keep it 5. When you sell your boat, you have to remortgage again, incurring more fees etc etc. Your mortgage is for your home, not for your toys.

[/ QUOTE ]

only the same as if you move home after 5 years, and same again if you have a 10 year marine mortgage and change boats after 5 I tagged my boat onto the house and pay peanuts compared to marine finance.
 
[ QUOTE ]
Not sure why I would want to?

Why pay for my boat over 25 years when will only keep it 5. When you sell your boat, you have to remortgage again, incurring more fees etc etc. Your mortgage is for your home, not for your toys.

[/ QUOTE ]

Because you may only be paying 3%
 
Thats a bad idea for 2 reasons. Firstly if you find you can't afford the extra payments on your house to fund the boat, you could lose your house. Secondly, unless you make overpayments, the equity in your mortgage will reduce more slowly than the equity in your boat. Golden rule of borrowing is to ensure that the equity remaining in the loan is always less than the value of the asset
At least with a marine mortgage, the mortgage is secured on the boat and if the worst comes to the worst, you hand the boat back and wash your hands of it. All in IMHO and I know some peeps think different
 
You are not correct. A debt is a debt, and not ringfenced. They can make claim against any asset, including your house, if there is a shortfall in the security. Your house isnt "safe" just because you take a marine mortgage; its just not the first line of call.
If you make house mortgage overpayments, its goes against the loan outstanding, not the total,future loan+interest. If you borrow £50k on your mortgage at 3pct and repay within a year, you have paid 3pct (less charges/penalties as stipulated in the agreement) . Its nothing to do with differing equities in the asset. Its just a loan...
 
[ QUOTE ]
Thats a bad idea for 2 reasons. Firstly if you find you can't afford the extra payments on your house to fund the boat, you could lose your house. Secondly, unless you make overpayments, the equity in your mortgage will reduce more slowly than the equity in your boat. Golden rule of borrowing is to ensure that the equity remaining in the loan is always less than the value of the asset
At least with a marine mortgage, the mortgage is secured on the boat and if the worst comes to the worst, you hand the boat back and wash your hands of it. All in IMHO and I know some peeps think different

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Agree with gjgm. And the only golden rule of borrowing is to ensure you can service the debt. The 'loan to value' ratio only comes into play (pricing considerations excluded) if you have to sell. It's generally a good idea to arrange the finance amount and repayment terms so that you always have positive equity, but whether it's anything more than that depends on personal circumstances and other factors.
 
[ QUOTE ]
if the worst comes to the worst, you hand the boat back and wash your hands of it.

[/ QUOTE ]

gigm is correct. It's been discussed on here many times. If you fail to make the payments on a boat loan the bank will repo the boat and sell it, then still come after you (and your house equity) for any shortfall. These loans are not limited recourse
 
Knock, knock

£100 000 boat bought on the never ever over 10 years costs

£20 000 deposit
£1119.44 month x 12 x10

Total
£ 154 332



Thats a wasted

<span style="color:red"> £54 332</span>


Cant you buy a Bayliner with the £20 000 deposit, save the £54 332 and then buy a boat, with the £ 74 332 in your hand you may even get a £100 000 boat for cash.

If you do the same with your cars you will soon have £100 000 anyway.








Figures taken from Essex Boat yard site on a Barclays deal.
 
Re: Knock, knock

this sounds like car loans.. you get charged the whole principal over the life of the loan, even though you are repaying some. That really racks up the APR.
However, your example isnt quite fair as money has a time value. Imagine, if you like, you put £80k into a savings account, and borrowed £80k on the mortgage. The true cost is the difference. (The fact that you dont make that savings deposits doesnt alter the maths; you have to discount the future cash flow back to todays values- if you find that hard to grasp, have a look at your pension's future"purchse power" estimates!)
It still might be expensive, but it probably isnt anything like £54k.
 
Re: Knock, knock

[ QUOTE ]
£100 000 boat bought on the never ever over 10 years costs

£20 000 deposit
£1119.44 month x 12 x10

Total
£ 154 332

Thats a wasted

<span style="color:red"> £54 332</span>

Cant you buy a Bayliner with the £20 000 deposit, save the £54 332 and then buy a boat, with the £ 74 332 in your hand you may even get a £100 000 boat for cash.

If you do the same with your cars you will soon have £100 000 anyway.

Figures taken from Essex Boat yard site on a Barclays deal.

[/ QUOTE ]

What's wasted? Your argument is financially illiterate. Interest is no more and no less than the cost of renting someone else's money. If you don't want to pay the rent, don't borrow. If you're happy to pay the rent, that's up to you. No-one (including you, DAKA) can make that decision/judgement for anyone but him/herself.

BTW, the implicit interest rate in the illustration you quoted is 11.4% pa, which looks pretty hefty with base rate at 1.5% pa. If you could borrow the same amount against the security of your house at (say) 4% pa, the monthly payment would be £810 and total interest paid over 10 years £18,200.
 
Re: Knock, knock

I am surprised with your response.

I hadn't made a decision for anyone.

The thread is about the cost of borrowing on a boat.

All I did was to articulate the costs into ££££££££££££s

Which bit was illiterate /forums/images/graemlins/confused.gif

In my opinion I showed an alternative cost effective way of purchasing a boat.

You will note from my profile that one of my first boats was a Bayliner.
My finance model worked for me /forums/images/graemlins/smile.gif

Sorry if it disgusts you /forums/images/graemlins/confused.gif
 
[ QUOTE ]
gigm is correct. It's been discussed on here many times. If you fail to make the payments on a boat loan the bank will repo the boat and sell it, then still come after you (and your house equity) for any shortfall. These loans are not limited recourse

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You're right it has been discussed on here many times but the point is that a marine mortgage involves a sizeable deposit (I dunno these days, 15/20/25% maybe) and the loan is generally over 10 yrs not 25yrs so it is very unlikely that, in the event of a repo, the value of the boat is less than the outstanding equity. That's why marine finance co's ask for a sizeable deposit and limit the loan to 10 yrs (maybe 15yrs now) so that they are not left in this situation.
If you remortgage your house, the debt is depreciating over 25yrs and in the early years may be depreciating very slowly indeed so that, if you have to sell your boat maybe through a change of financial circumstances or whatever, you may end up owing a lot more on your mortgage than before you bought the boat. That is unless you're sufficiently disciplined to overpay your mortgage payments so that the equity reduces at the same rate as the value of the boat and we all know that very few people are disciplined enough to do that, hence the mess this country is in
 
Re: Knock, knock

[ QUOTE ]
the implicit interest rate in the illustration you quoted is 11.4% pa, which looks pretty hefty with base rate at 1.5% pa. If you could borrow the same amount against the security of your house at (say) 4% pa, the monthly payment would be £810 and total interest paid over 10 years £18,200.]



[/ QUOTE ]

I am not clever enough to give an illustration. /forums/images/graemlins/wink.gif

I just went on Essex boatyard site, found a boat for sale at £99 950 and quoted the figures from Barclays, why not report them to Gordon, they should be giving money away /forums/images/graemlins/laugh.gif

Link to th real world for all thoses who cant get a free loan
 
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