jfm
Well-Known Member
Re: What\'s the marine mortgage market like now?
I think there is some mixing up here. If you borrow say a marine mortgage then it's a personal loan and you are fully liable for it. There doesn't need to be a "personal guarantee" document for that to be true. Indeed, there is no such thing really as a "personal guarantee". A guarantee is only ever relevant if a thrid party (ie not the borrower) gives it. If I borrow £100 off you and say "I promise to pay it back" you have a debt claim against me. If I then say "I guarantee to pay it back" what difference does it make? None. But if my brother says to you "I guarantee jfm will honour the loan" that counts for something. So a guarantee must involve a third party.
So if you default on a marine mortgage the bank can repo the boat but if that doesn't pay off the loan they can pursue you for your personal assets including your house equity etc.
It's just the same with your house mortgage. If you defualt on that the lender can repo the house, and if there's a shortfall the lender can still come after you for your other assets (say, your boat!)
Loans do exist where the lender can only sieze the security asset (ie the boat or house) and not pursue the borrower for his other assets, and they're usually called "limited recourse" loans, but they dont exist in the retail market
The only advantage in security terms of securing a loan on your boat/house/whatever is (a) the lender controls the sale of the security asset and (b) the lender doesn't have to share the proceeds of selling your boat/house/whatever with other lenders, in a bankruptcy situation
So to get back to the point, if you defualt on a marine mortgage the lender can seize the boat and keep ALL the sale proceeds of it, and the lender can pursue you for your house equity and other assets but will have to share the proceeds of those pro rata with all your other creditors, in a bankruptcy
I think there is some mixing up here. If you borrow say a marine mortgage then it's a personal loan and you are fully liable for it. There doesn't need to be a "personal guarantee" document for that to be true. Indeed, there is no such thing really as a "personal guarantee". A guarantee is only ever relevant if a thrid party (ie not the borrower) gives it. If I borrow £100 off you and say "I promise to pay it back" you have a debt claim against me. If I then say "I guarantee to pay it back" what difference does it make? None. But if my brother says to you "I guarantee jfm will honour the loan" that counts for something. So a guarantee must involve a third party.
So if you default on a marine mortgage the bank can repo the boat but if that doesn't pay off the loan they can pursue you for your personal assets including your house equity etc.
It's just the same with your house mortgage. If you defualt on that the lender can repo the house, and if there's a shortfall the lender can still come after you for your other assets (say, your boat!)
Loans do exist where the lender can only sieze the security asset (ie the boat or house) and not pursue the borrower for his other assets, and they're usually called "limited recourse" loans, but they dont exist in the retail market
The only advantage in security terms of securing a loan on your boat/house/whatever is (a) the lender controls the sale of the security asset and (b) the lender doesn't have to share the proceeds of selling your boat/house/whatever with other lenders, in a bankruptcy situation
So to get back to the point, if you defualt on a marine mortgage the lender can seize the boat and keep ALL the sale proceeds of it, and the lender can pursue you for your house equity and other assets but will have to share the proceeds of those pro rata with all your other creditors, in a bankruptcy