Marine mortgages refer to loans made to the purchasers of a boat whereby the boat itself serves as the collateral. Marine mortgages are registered under the Merchant Shipping Act 1993. Marine mortgages are useful for those of us who are not in a position to fund the purchase of a sailing vessel simply from our cash reserves. Marine mortgages are not the only financing option available, however given the boat itself is being used as collateral for the purchase, the lending terms will often be more favourable than via other methods such as unsecured financing on credit cards or bank loans. HSBC and the Bank of Scotland are two of the key providers of marine mortgages and they both offer a variety of options at competitive rates.

Marine mortgages are very similar in their construction to auto loans, whereby finance is generally secured on a depreciating asset. For this reason, banks and other marine mortgage providers will be less willing and able to lend at high loan to value ratios - consider that the loan to value ratio will be increasing over the life of the loan (i.e. the value of the asset will generally fall at a faster rate than the capital is repaid on the loan). So do not expect to be able to borrow at a level significantly above 75% of the purchase price. There may well be exceptions to this. The construction of marine mortgages is therefore very different to those of conventional residential mortgages where the loans are secured on what has historically been an appreciating asset (residential property). Even in period of significant house price decline, prices fall perhaps by 30% but it is generally expected that in the recovery stage of the economic cycle that they will pick up again. It is generally expected for auto and the marine assets upon which marine mortgages are secured will depreciate in value on a continuous basis, albeit at a decreasing rate.

If you require any more information regarding marine mortgages, please contact us and we will be more than happy to help you find the perfect marine mortgage deal.