Marine Finance can be either a Marine Loan or Marine Mortgage
Marine Loan’s are often used for buying smaller boats, refitting, or purchasing extra equipment and Marine Mortgages are more suited to purchasing boats with a value over GBP 3,000 and can normally be up to 70% of the total value of the boat.
So for example if you are looking to finance a boat with a valuation of GBP 30,000 then you could usually finance up to GBP 21,000 with a marine mortgage.
Marine Mortgages are ‘secured’ on the boat and typically last up to a maximum of 10 years. Marine mortgages are typically from £25,000 to £50,000,000.
Generally, with marine mortgages a minimum customer deposit of 30% is required.
Just like with a “bricks and mortar” house mortgage, marine mortgages are available in various styles.
Marine Mortgages & Fixed Interest
A fixed interest rate may suit your needs, with fixed interest marine mortgages you can usually inject lump sum capital repayments at any time, or settle your marine finance mortgage in full at any time without penalty (this maybe subject to a small administration fee).
Alternatively, the balanced payment plan marine mortgage is one of the most popular marine mortgages available. This boat mortgage is linked to Base Rates, and monthly repayments are fixed and stay the same for the entire period of the marine mortgage. Fluctuations in interest rates will change the estimated length of the marine finance agreement so if rates fall, then the marine mortgage will be repaid early and if they rise then it will repaid later.
You may want to consider the balloon payment mortgage, this enables you to significantly reduce your regular monthly mortgage repayments by deferring some of the marine mortgage to the end of the marine finance term. The one off ‘balloon’ payment is settled at the end of the marine mortgage term.
If you wish to settle your marine mortgage early, there is no penalty. In addition, you can also pay in lump sums at any time (usually subject to a fixed admin fee of for example, £100 for each capital repayment).
This type of marine finance is attractive if you plan to sell your boat before the balloon payment is due or you would like to have a higher specification boat for a lower than normal monthly payment.
A low start marine finance gives the option of lower monthly repayments in the early stages of the marine mortgage period. Generally this facility is limited to the first three years only. In the following years monthly repayments then increase slightly annually, in order to ensure that full repayment is achieved over the agreed boat mortgage term.
A variation of this type of marine mortgage is the interest only option. In this case, only the interest on the capital is repaid in the early years, and none of the capital, which equates to lower monthly repayments. Following the interest only period, then monthly repayments increase annually to allow for repayment of both the interest and the capital within the agreed term of the marine mortgage.
Variable interest rate marine mortgages are linked to a bank base rate with customer repayments moving up or down in line with fluctuations in interest rates. With variable rate lump sum repayments can be made at any time with no penalty. From this point, the interest charge will be based on the reduced balance. However, the term of the marine mortgage will remain fixed as any interest rate variations are accounted for with higher or lower repayments.
You can make lump sum repayments at any time with variable rate marine mortgages without penalty. If you pay in a lump sum, it will be credited to your account the day it is received. From this point, your daily interest charge will be based on the reduced mortgage balance.