Yacht Financing

Assets America® offers luxury yacht financing for yachts, super yachts and mega yachts starting at $5 million and beyond!  Yachts are watercraft used for sports, commercial use (chartering) or pleasure (including fishing), with a minimum length in the 30-foot range.  Superyachts are large, expensive, professionally-crewed yachts, informally sized at 79 feet or greater, although the dividing line is somewhat subjective.  Megayachts are the biggest and most expensive yachts, starting from 164 feet and beyond.

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Yacht Valuation

Yachts are configured as sailing or power vessels, although many sailing yachts have motors as a backup.  While yachts can be quite large, they are dwarfed by commercial maritime vessels like oil tankers, ocean cruise liners, and cargo ships.  Yachts can yield income through chartering, which can figure into the process of obtaining yacht loans.  Super-yacht and mega-yacht designs often reflect the personal tastes of their owners, another factor reflecting their value for yacht financing purposes.

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Many factors figure into the evaluation of a luxury yacht, including its purpose, size, number of engines, sleeping accommodations, crew size (if any), chartering income (if applicable), its suitability for different sea conditions, fuel consumption and new versus used. Other factors include the legal jurisdiction of the lender, the borrower and, of course, the yacht itself. International considerations can complicate financing and must account for different laws and cross-border tax implications.


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Yacht Survey

For yacht financing and insurance purposes, a yacht, superyacht or megayacht must undergo a survey, a procedure similar to a home inspection. The three types of yacht surveys are:

  • Insurance survey:  This type of survey is for renewal of insurance policies, not for acquisition. It is a light inspection that tries to identify outstanding issues.
  • In-shore and coastal survey:  This is the most common survey and is a good choice for many yacht purchases. It includes a full equipment listing, a confirmation of the hull number (much like a car’s VIN), complete system testing, and an out-of-water check of running gear, hull and bottom paint.
  • Offshore survey:  This is the most time-consuming and comprehensive survey, appropriate for ocean-going yachts. It expands on the in-shore and coastal survey with ultrasonic tests, hull moisture tests, heat-sensing scans, engine manifold tests, and more.

Yacht-Building Contracts

The individual nature of luxury yachts means that yacht-building contracts are not standardized the way that oil tanker contracts are standardized.  The yacht building yard will enumerate all the luxury yacht buyer’s individual requirements in the contract, which will probably go through several drafts before it is finalized.

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The contract structure reflects the obligations of the builder and the buyer. It will also include warranties, tax provisions, and often, confidentiality clauses, as the owner of a mega yacht often wants to keep a low profile. Ideally, the ship yard delivers to the buyer the yacht exactly as specified, and the buyer receives a clean title upon payment of the purchase price.

Yacht Registration

Yachts must be registered in a country, but not necessarily in the country of the seller or the buyer.  Registration is fairly easy as long as the yacht meets certain criteria, such as technical standards and age, especially in “open registry” countries like Liberia, Panama, Cyprus and the Bahamas. “Offshore registry” countries are usually colonies or dependencies, like the Netherland Antilles, Cayman Islands and the Isle of Mann. If the owner is a U.S. citizen, yachts weighing 5 tons or more can be registered at the National Vessel Documentation Center of the U.S. Coast Guard. Coast Guard documentation offers access to a preferred mortgage that gives the lender certain benefits, and most U.S. yacht lenders require that financed yachts are documented.

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Yacht Financing – FAQs

Across the world, the boating market—whether monohull sailboats, catamarans, yachts, or superyachts—is a buyer’s market and should remain that way for the foreseeable future.  Because fiberglass and other light, super-durable hybrid materials last so long, the market has become increasingly flooded.  Often multimillion-dollar yachts are selling for a fraction of what they were just 7-10 years ago.

The simple answer is yes, at the beginning of the off-season, although that varies around the world and especially between the northern and southern hemispheres.  In Florida for instance, the best time to buy a yacht is mid to late August.

In addition to purchasing the yacht, owners typically pay for mooring and storage, insurance, operational costs, crew, maintenance, and winterization.  These costs can be rather substantial.  Before purchasing a yacht, one needs to make sure they are financially secure.

Yes, for example, if a yacht has a berth, head, and galley, then it can qualify as a second home.

While our loans start at a bare minimum of $5 million, there is no upper limit to the amount of financing available to you via Assets America®.

While the standard down payment is 20% to 30%, really strong borrowers may be able to make a smaller down payment depending on the quality of their credit, their financial statement, and their cash position.

Financing a Yacht

When purchasing an existing yacht, borrowers usually take out yacht mortgages on vessels.  Different arrangements are used for yacht building contracts and for chartered yachts.  Other factors that can affect the loan contract are the current and proposed registration jurisdictions, the tax treatment of the yacht and the owner’s tax status.  It can be said that yacht financing is arranged to protect the lender from the borrower’s other creditor claims.

Yacht Loans

Yacht financing can be arranged by private commercial lenders like Assets America®, as well as banks, credit unions, boat brokers and yacht manufacturers. Typically, the loan agreement takes on a basic asset-financing structure, collateralized by the fully amortizing yacht mortgage and a lien on the yacht, as well as insurances signed over to the lender. In addition, the loan agreement may give the lender a lien on any revenues generated by chartering the yacht. Finally, the lender may require a personal guarantee and/or debenture from the borrower giving the lender a lien on the borrower’s other assets.

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For yacht-building contracts, the loan agreement will provide for cash advances to pay for pre-delivery construction milestones. Payments start with a pre-build deposit by the buyer, followed by installment payments as building progresses through succeeding stages, evidenced by Stage Certificates. Pre-delivery requirements also include assignment of the yacht-building contract which, in the case of default, gives the lender the right to have the builder finish construction, at which point the lender takes possession of the vessel and sells it. The yacht financing lender will release funds to the yacht builder upon receipt of each Stage Certificate accompanied by the counter-signature of an independent surveyor. The yacht-building contract usually contains clauses specifying procedures to be followed if default occurs either by the builder or the buyer.

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All loan agreements will contain language relevant to warranties, insurances and registration. The lender might also require covenants that preclude certain uses of the yacht, such as chartering. The borrower’s surveyor will have inspection rights to protect the borrower’s interests.

Yacht Leases

Some folks choose to lease their yachts rather than purchase them. The lessor gains title to the yacht and leases the yacht back to the lessee for an agreed term. These leases are usually “demise charters” that provide the lessee exclusive use of the yacht, making the lessee the operational “owner,” although the lessor maintains title.

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Yacht Financing from Assets America®

If you are contemplating the purchase of a yacht, or a yacht newbuild, check out the yacht finance packages we offer at Assets America®.  We can arrange a yacht loan for you that is sure to meet your requirements, even if you are somewhat credit challenged.  Our yacht loans start at $5 million.  Don’t postpone purchasing the yacht you deserve.  Call us today at (206) 622-3000!

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Glossary of Marine Lending Terms

Accessorial ChargesA fee for services such as loading, unloading, pickup, and delivery
Bluewater VesselAny form of boat or ship suitable and equipped for sailing or motoring on the open ocean
Charter PartyThe individual or group hiring the shipowner and/or captain for temporary use of the vessel
Demise CharterAlso called a bareboat charter, this is an arrangement to hire a water vessel whereby no crew or provisions are included as part of the agreement
IRC Section 163A code of the IRS designating a water vessel as a qualified residence and therefore capable of receiving tax advantages
Length Over All (LOA)The length of a yacht as measured from "stem to stern.” Marinas and harbors often use this metric to determine how much to charge for a slip or similar accommodation
LienA legal right that guarantees an underlying obligation, for example repayment of a loan
ManifestA list of all individuals, cargo, and equipment on board
Voyage CharterA contract whereby the captain and/or shipowner places the yacht at the disposal of the charter party for one or more voyages to one or more destinations, while the captain and/or shipowner remains responsible for the operation of the yacht
Tramp ScheduleVessels operating without a fixed itinerary or schedule or charter contract

SuperyachtAlso called Megayachts, the terms often refer to yachts with an LOA of over 164 feet and/or full-time staff and crew
Yacht CharterA contract wherein the yacht is rented out fully staffed to an individual for a limited amount of time, typically a matter of days or weeks


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