Finance for boats.
Like
home mortgage products, there are a multitude of different
marine finance lenders out there all offering different products
and rates. Specialist help who has no axe to grind by being tied
to one particular financing source
is at hand, they are know as "Finance Brokers".
Why
use an independent marine finance broker?
A
Boat Finance Broker will be able to find the right lender
for your particular circumstances relating to credit history, current
financial situation, type and age of vessel, repayment period required.
Boat
Finance Brokers have a great degree of expertise in searching out
the very best finance deals available and also have knowledge of
all the
possible alternatives when considering funding your boat purchase.
Types of Funding Available.
There are many products and options in the market place, which
you may want to consider. Here we explain the options available
and hopefully
you will start to come to a decision as to which product best
suits
you and which variations fit into your personal circumstances.
Marine
Loans – (Boat
Finance Unsecured).
These are completely unsecured,
a bit like a personal loan from a bank. They are available for
amounts from £1,000 to £25,000,
typically used for smaller value boat purchases such as dinghies and
small inland waterway craft but can be also used for sails, engines etc
etc.On amounts over £15,000 for boat purchases, a deposit
of up to 20% of the cost may be required.Repayment options are between
2 and 5 years.Applications are quickly turned round and funds can
be available within a week.
Top Marine
Mortgages – (Secured on Vessel)
These are the main, indeed almost the only way to fund
purchases of boats when amounts financed required are over £25,000.
There is no upper limit to the amounts available on marine
mortgages, limited only by
your ability to repay. Repayment periods vary dependant on
lender, more often than not between 2 and 10 years.
The marine
mortgage itself
is secured only on the vessel in question not against
your house. In the event of defaulting on your repayment
the
finance
company has title to your boat and can repossess. Deposits
are always required, like when
buying a house. These vary being as low as 10%
of the cost price with the
norm
being
20% deposit. In special circumstances where
the vessel being purchased is priced significantly below
valuation, it may be possible to negotiate a no deposit
option although
this would be very rare.
Equalised Repayments
This is a very popular method for funding, currently
the most commonly used method. The main feature being
that payments remain constant
throughout
the period making budgeting easy. The underlying interest
is, however, variable with any adjustment to the interest
being made
at the end
of the agreement either by refund of overpayment or request
for payment of additional interest.
Top Variable
Rate.
All variable rate agreements allow any overpayment
to be made which instantly affects the total interest
you
pay
as the interest
is calculated
on the outstanding daily balance and also means that
there are no penalties for early settlement.Standard
variable
mortgages.
These reflect changes in interest rates with a change
in payment. These are not as easy to budget for and
your payments
could increase
dramatically
if interest
rates rise quickly over a fairly short period.The other benefits
of equalised payments remain the same additionally
should you make
large capital repayments
you could amend your monthly
payments downwards if required.
Fixed Rate.
Fixed rate mortgages, unlike residential fixed mortgages,
which generally revert back to a variable rate after
a period, remain
fixed for the entire
period of the mortgage. Such a mortgage is very good
for budgeting as once the initial period is finished
no further
payment is
required regardless
of what has happened to interest rates during the period.On
the downside, you cannot make overpayments and there
may be a minimum
two-month
interest penalty on settlement depending on which lender
has underwritten the deal.
Additional Options you may want to consider.
Over and above a standard repayment period there are options
on repayment you may want to consider. They are designed to suit personal
cash flow
needs:-· Deferred repayments for first 3 months
· Low start repayments for first 12 months
·
Balloon payments – where an amount of capital is deferred until
the end of the agreement, which reduces the amount of monthly payment.
Commercial
Vessel Financing.
In addition to the funding of pleasure craft, financing of commercial
vessels is possible, whether ocean going or inland. This funding
is rare in the market place but terms can be arranged with three
major lenders in this specialist field.Marine Insurance.
Marine insurance is
mandatory on all boats purchased on finance, indeed it makes
obvious sense regardless of how it is funded. An introduction on your
behalf
can be made to a panel of insurers.
Top Life
Assurance.
Whilst
life cover insurance protection is not mandatory, like most
home mortgages, it makes perfect sense to protect probably
the second largest
purchase
you
will
ever make. Life cover, sickness, critical
illness and/or redundancy cover on your loans can all be arranged
(more often than not without a medical) and payments collected
in conjunction
with the finance repayment.Registration
and Survey Fees.
A survey is almost conditional to finance being granted on
a mortgage basis. This can be arranged via the mortgage provider
and can even
be funded on the loan. Sometimes the survey will have already
been arranged
by the vendor and in such cases, assuming the valuer is qualified
and reputable, this will be acceptable to the lender.Registration
of the vessel can also be handled on your behalf. Charges
for this can be added to the loan also.
Timescales.
Subject to timings in relation to survey work etc, the marine
mortgage or boat finance can be obtained sometimes within a fortnight.Timeline.
1. Research in magazines and Internet contemplating other costs
of ownership.
2. Choose the boat of your dreams.
3. Discuss the options and apply for the required finance.
4. Agree the price with the vendor requesting evidence of clear
title.
5. Arrange survey and valuation.
6. Select a lender.
7. Marine Mortgage or Boat Finance documentation is drawn up.
8. Arrange boat insurance to commence on the day of delivery.
9. Documentation is
sent to you for signing.
10. Funds transferred direct to the vendor.
11. Register vessel.
12. Repayments will commence 1 month after delivery (unless the
deal is structured with deferred payments)
Top
|