Setting Sail with a Yacht Loan
Nothing says High Net Worth Individual quite as succinctly – or indeed as spectacularly – as owning a superyacht. However, for those who are not quite yet up to owning their own version of the world-record breaking £2.8 billion History Supreme, there are plenty of more modest yet still luxurious options.
The difficulty with securing such a vessel though is that even if you have the money, finding the right way to structure both the yacht loan and the ownership arrangements can be difficult, not least because of the complex cross-border wealth management concerns so often inherent in obtaining a yacht loan.
Important questions
The last thing any person wants to do when attempting to secure a yacht loan is to become financially overstretched. This is why you need to sit down with your financial adviser and establish a maximum spend.
Only once this has been done can you begin to look at the question of your yacht loan – i.e. what is the best way for you to finance ownership. Common arrangements include refinancing, purchase financing, construction financing as well as yacht loans from specialist providers.
However, even once you have identified how you wish to proceed, achieving ownership can be difficult. This is because seafarers and wealthy cross-border individuals must negotiate the numerous international regulations and international sanctions policies that exist in relation to yacht finance; depending on where you, your business and your assets are located, it may be more or less difficult to finance the boat in the way you desire. Not only do lenders want to understand your circumstances and where these fit with their various criteria, they also want to be sure that they have suitable recourse in the event that they need to enforce the loan.
How much is too much?
You should be sure that you haven't borrowed too much when financing your boat. At the highest end, most lenders will not finance more than 50% to 60%, and this usually requires you to commit to some form of investment relationship in return.
In some cases the yacht itself may be seen as sufficient security, but in some situations lenders may ask for further security – it is up to the individual buyer to decide whether they wish to keep their yacht finance separate from their other assets.
It is important to remember that higher-end yacht prices have dropped significantly since their peak in 2009 and the yacht finance industry has adjusted loan to value requirements in response – in 2019 finding finance for more than 60% will be a difficult task.
Blacktower FM, Wealth Management for Seafarers
Blacktower FM can help seafarers and cross-border individuals with all aspects of yachting financial solutions and associated wealth management, especially when it comes to financing a boat.
Whether you earn your income in USD, EUR, GBP or another currency, whether you reside in the UK, the EU, the US or elsewhere, we can help you negotiate the many complexities and regulations you will encounter.
Contact our independent financial advisers today for more information.