With many people looking to buy a boat at next month’s Southampton Boat Show Stuart Austin, MD of Promarine Finance, looks at finance options to help you live the dream.
The dream of boat ownership or upgrading your existing boat need not be that far away. This could be a motorboat with a cuddy or an extra berth, changing from a day boat to a coastal vessel or even upgrading the outboard and trailer. Maybe you just want to scale up the size of your current boat.
Taking out a personal loan is one option, but it is important to do your research and ask the right questions. Find out precisely who you are dealing with and whether they are a broker or a lender. Check what fees are payable and when and if their quote is realistic or there is a sliding scale according to the customer’s credit rating. Can you speak to a decision maker and do they understand what you want?
Remortgaging your house
Remember your house is at risk with this option. You will probably need a survey and incur other lender fees. It can be a slow process and may impact on your life more than you wish. It is an option worthy of consideration for more expensive boats if you have lots of equity in your home and are comfortable with the idea of your house being at risk.
Since several bank owned marine finance subsidiaries closed their doors for new business prior to 2010 there are three main lenders remaining in the market. Each has similar criteria and want to lend on larger boats.
Ideally, minimum borrowing starts at £50k. They will lend at low rates and over 10 year periods. The downsides are long-winded application processes and strict lending criteria for yourself and also your boat. There may be little flexibility.
The boat will need to be surveyed unless new, will need to be Part 1 Registered with the MCA and have at least five years’ ‘bills of sale’ history.
New marine lenders
Over the past 12 months a couple of new marine lenders have appeared in the market place. Again beware of brokers and clarify what they are offering as recommended for the personal loan option mentioned earlier.
Speak to the underwriter and understand what they want to see from you so you can make a decision as to whether to invest time with that lender or move on. Ascertain what they do if you miss a payment for whatever reason.
You will probably need a survey and at least five years’ ‘bills of sale’ history.
As a lender in the market since 2010 Promarine Finance looks for a ‘decent’ credit payment history, affordability and needs to understand why you want the boat you are considering. The type, size and condition of the boat also need to be acceptable.
Setting a budget
A good rule to follow is borrow the least amount of money you need over the shortest period.
Decide on what boating you want to do and why. Try to be clear on this because it will save you changing the boat if you get it wrong. Some lenders will allow you to settle and change the boat and help you but others may not and could charge penalties to do this.
Think about how much can you justify spending on your boat each month and remember you will probably need to pay mooring fees, insurance, repairs and upgrades too.
Once you have established the monthly figure, find out how much this will allow you to borrow. The Promarine Finance website has an online calculator http://www.marine-finance.org/calculate-apply.php.
For example if you decide £393pm is your affordable budget, you can work out that you can borrow £20k over 10 years or £10,500 over three years.
Taking this on a step, if you have £10k cash or a £10k part-exchange boat, this means you can consider a £30k boat over 10 years or a £20k boat over three years.
Do your homework. Choose a company that best suits your needs and whom you feel comfortable with as you will be in a relationship with the lender and it is important you get on. Do not just rely on email and web applications. Pick the phone up and talk to a real person and start to build that all-important relationship.