Marine Mortgage vs house mortgage

JeremyF

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With interest rates down another half point, its getting tempting to consider upgrading. But, what on earth is the justification for the difference between marine and house mortgages. Yes, there is more security inherent in a house (like it doesnt move!) but in reality the finance risk is against the person, not the property offered as security.

Has anyone extended their home mortgage to help fund a yacht, or is that dangerous?

Jeremy
 
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the answer is that some (nay MOST) marine mortgages are nothing more than personal loans with variable interest rates and because of FIXED payments therefore variable terms. Because most British yachts are only on the SSR which is unwilling to register charges against the yacht it is in effect an unsecured loan. Some people have been put to the tedious lengths of redeeming one of these mortgages and taking out another thinking that there was a charge registered, in fact I have evidence of one client being told by a marine mortgage company that they had actually taken a charge against the boat when in truth they had not.

As to using the spare equity in your own house, well if you are happy that "Your home is at risk unless you keep up payments on a mortgage or other loan secured against it" then go ahead it will be cheaper. Most house mortgage companies will omnly go to a max. borrowing of 80% of the value of the property when there is an element of capital raising and there are other limitations if the loan is above 50,000 for non-housing related purposes.

There are some good deals around at the moment for re-mortgaging. One scheme offers 3-2-1-0.5-0.5% off the SVR for the first five years. For a simple re-mortgage (inc a new boat loan) the lender will pay all the costs both valuation and legal, there is no tie-in beyond the discount period 10% can be repaid early each year inside this perod without penalty and there is no application charge. This can give substantial savings and must be considered seroiusly in the current climate of low interest rates.

Steve Cronin
 

JeremyF

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Could you let me have the name of the mortgage cmpany with this sliding discount for the first few years. Looks like a good deal if one intends to pay off early in the term?
 

johndf

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With regard to your question: 'Has anyone extended their home mortgage to help fund a yacht?', I know a number of people who have done so. It is only dangerous if enough of the factors below apply:

a) House prices fall
b) Interest rates rise
c) Your total loan is close to the overall value of your house
d) Your income falls

Unless you can see into the future, it is not possible to say how dangerous it is. I'd be happy to have a 75% loan, 3 or maybe 4 times my income, fixed or capped for the next five years. I wouldn't be happy with a 95% loan, 6 times my income, with no fixed or capped term.

If things go 'pear-shaped', you can always sell the boat as a first resortto repay a good part of the loan, but make sure the boat is fully insured.
Alternatively, you could sell the house if things go awry.
 

david_e

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With the advancement in the range of mortgage options these days I think your question is quite relevant. Products such as flexible mortgages allow you to borrow large amounts (where the equity is available) over longer periods where the benefit is lower monthly repayments. Additionally you can fix part of the loan, say your boat element, for 3 or 5 years at rates which currently look very good. These factors in turn allow you to protect the payments against sickness/unemployment etc at a nominal cost. What I mean here is that the cost is set against the monthly payment so if the loan is over a longer period the payments are lower and the protection costs are lower. This also means it is affordable and a better deal alround. I havn't donemuch research into Marine Mortgages but if they are anything like car loans then the costs can be astronomical. Good luck.
 

Piers

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To me, the main differences would be in security - your personal security.

Boat mortgage - higher interest rate, and if you default, the boat is taken.

House mortgage - lower interest rate, and if you default, the house is taken.

You pays yer money and you takes your choice....

Piers du Pre
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simon

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Virgin One Account

I recently remortgaged my house with Virgin One - for the house alone it has proved to be an excellent choice. It is a combined current & mortgage / loan account. Current rates vary between 5.1% and 5.95% depending on the % of the house valuation that you require. Once valued you can draw on the facility at these rates for any reason.
i am about to pay off my boat mortgage and put this in the "pot".
What's more, if anyone applies on my recommendation, I need to give them a sticker to apply to their application form, we both get a £222 credit. So if you decide to, let me know first!!!!!!!
Details : www.virginone.com
 
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