Buying the boat

Having had our offer accepted it was time to find out how to raise the money. The broker advised us that for purchases of this level a Marine Mortgage was the way to go. He also gave me the details of a company who specialise in these.

Apparently the options for financing a boat are:

An unsecured loan of up to£15,000. marine finance companies will fund 100% of the purchase. Repayment up to 5 years.
A marine mortgage for above £15,000. The finance company will fund only 80% of the cost. Repayment period of 10 years. Interest is charged at a percentage above the Finance House Base rate. This rate is set nationally with reference to the Bank of England's base rate. This was the only realistic option open to us but did mean having to have quite a lot of cash available for the deposit.
Of course there may be other options for people depending on their circumstances. I have heard that some people re-mortgage their house to raise the money.

I eventually contacted my bank (Barclays) as they now have a marine finance facility. They would charge me a slightly better rate of interest as I was a customer.

There are 2 ways of paying back a marine mortgage:

Even spread
Interest rate is variable, however monthly payments remain the same. Should the base rate fall then the term of the mortgage is shortened. Conversely if the base rate rises then the term is lengthened.

Fixed rate
The interest rate is set at the beginning and remains fixed so the repayments and the term remain fixed also.

Which one to go for? Well it's a gamble really. Fixed term rates are usually slightly higher than even spread so the monthly payments are a little higher but you know exactly what your outgoing will be. If you feel the base rate may drop then the even spread will mean you pay less (not the full 10years) I opted for the even spread because I feel that over the next few years British interest rates will have a downward pressure on them in order to bring them down to the level in Euroland so we can join the single currency. I could be wrong of course!

Generally with boat finance there are no set up fees or hidden costs. You can pay back more if you wish, pay lump sums, settle early with no penalties. (often only after 1 year)

I would advise anyone contemplating buying a boat to talk to finance houses first. Some will give an "offer in principle" before you even decide which boat. This means you can make an offer on a boat with the confidence of knowing you can actually get the money.

Doing it the way I did it you are open to embarrassment if you glibly make an offer and then find no one will lend you the money!

Any finance house will require a survey and valuation report from a suitably qualified marine engineer before they will release the money. They will also need some sort of evidence from the vendor that they actually own the boat and are legally entitled to sell it. They will also need the boat to be insured by you.

Generally a broker will ask for a deposit to hold the boat whilst this is going on. A private vendor probably will too. You should ensure this is returnable should the deal fall through!
In my case the broker asked for 10%. When I sent the cheque I wrote a letter laying out the terms in which I was making the offer i.e.
I confirmed my offer amount. I made clear that I understood the deposit was returnable. I made the offer subject to satisfactory survey and finance being available.

More on buying the boat