Marine Mortgages

[theguitardoctor]

Hi there,

 

Are marine mortgages nigh on impossible to actually attain...??

 

I am self employed and have a regular income of £13k after tax. I also get bonuses here and there and obviously leave profit in the business, so effectively the extra money available there is still mine should I wish to draw it. I don't do that because I want it in the business should I choose to invest in a new line of products.

 

I've applied for £25K over 5 years as I can easily manage the payments as they are £100 less than my current house rental. The mortgage would be secured on the boat, and my deposit is £45,000 in cash savings, so I basically only need a third of the total cost. The boat also has a permanent mooring set up as I believe the mortgage people (RoyScot Larch) need this also.

 

I've been refused the loan....why? Because my tax returns are low. Of course they are, that's how businesses work...keep your tax bill low by buying business related items, that way your business gets new equipment and the tax man only gets a small amount. My drawings are irrelevant apparently....???!!

 

I'm literally lost for words. We were told preliminarily that the amount we needed against the value of the boat meant we would almost certainly get the loan....can anyone shed any light on how we can improve our case?

 

We're trying a joint application now, but I can't see it being a great help as my other half is also self employed and her tax return is lower than mine as her shop equipment is replaced far more than my own due to wear and tear (she's a hair salon owner - I own a musical instrument retail shop).

 

All this after it's taken so long to negotiate the price and contract on our prospective boat...I'm banging my head against a brick wall.....

 

At a loss.....Rich

[Robbo]

If it's less than £25K, you can do a unsecured loan, which will give you more options and better than a secured loan (if you fail too pay they won't be able to take the boat off you)..

[Lady Muck]

It might have changed since we applied for ours (it was pre-credit crunch). Our shared income isn't that much a year (compares to you and your partners anyway) and we are both self employed, yet they did lend to us.

 

Perhpas it's not the people at RSL that you have to get angry at but the fact that banks just aren't lending like they used to.

 

If it's less than £25K, you can do a unsecured loan, which will give you more options and better than a secured loan (if you fail too pay they won't be able to take the boat off you)..

 

TBH, we have a similar income and we tried to do that (pre credit crunch). Because we are both self employed the most anyone would lend us was £2k So it was marine mortgage or nothing.

 

It's silly isn't it? I was once a high earner with a big mortgage a similar sized credit card debt and people were lining up to lend us more. Now I'm self employed, have savings and no credit cards or debt (boat is now paid off)and no one will touch us with a barge pole. We live in a bonkers world. *sigh*

Edited October 11, 2011 by Lady Muck

[NB Alton]

When we bought our first boat we both went to the bank & got a personal loan each to buy a "car" (that's what the assistant in the bank suggested we put on the form). There were no hassles they just checked what money went in our accounts each month and gave use the loans.

[Guest]

I think a problem here is that RSL have just about cornered the marine mortgage market for Narrowboats.

 

Since Barclays Marine Finance stopped providing marine mortgages RSL are as far as I know the only place you can get a longer term loan secured on a Narrowboat.

 

They have no real competition and so can afford to be 'picky' about who they loan funds to.

 

To the OP - did you discuss/suggest a longer term? - not ideal given the steep rate (again due to RSL's monopoly) but it would reduce the monthly payment.

 

Just to add - all that I have said RSL are an extremely good and efficient company to deal with.

[Athy]

If Barclay's Marine Finance do not offer boat mortgages, what the hell do they do? Their name kinda suggests that they might.

I have learned something new today - until this thread started, I don't think I was aware that one could get loans to buy boats.

I wonder if your insurance company could help?

[Guest]

If Barclay's Marine Finance do not offer boat mortgages, what the hell do they do? Their name kinda suggests that they might.

I have learned something new today - until this thread started, I don't think I was aware that one could get loans to buy boats.

I wonder if your insurance company could help?

 

Well of course they continue to collect payments on existing loans they have made, they no longer however get into new loans AFAIK.

 

When we bought 'The Dog House' in August 2010 we contacted BMF (along with RSL) and were told 'they were reviewing their business model with regard to new loans.

 

That review has as far as I know not led to them re-commence issuing new secured loans.

 

So we ended up in a situation where we either went with RSL (who were happy to loan us the funds) or had to withdraw from the prospective purchase and lose a substantial deposit.

 

Fortunately for us our circumstances changed quickly so we could pay off our marine mortgage within 18 months.

[David Mack]

I suspect as both self employed and on modest incomes you would find it equally difficult to get a bricks and mortar mortgage. The banks are so risk-averse that they just aren't lending to people whose circumstances are even slightly different from the norm.

 

When I sold my last house - in times much better than the present - our buyers were a self-employed couple. Although they both had fair incomes, an existing mortgage with clean repayment history and no doubts about their ability to repay, they had the greatest difficulty in finding anyone prepared to lend. In the same circumstances now I don't think they would succeeed.

 

Your best borrowing option is, as others have said, to apply for a personal loan for a "car".

 

But if you have £45k in cash, why not borrow less (or nothing) and buy a cheaper boat? Its a buyer's market at the moment and you lose nothing by trying a few low offers.

 

David

[Guest]

 

But if you have £45k in cash, why not borrow less (or nothing) and buy a cheaper boat? Its a buyer's market at the moment and you lose nothing by trying a few low offers.

 

David

 

Pretty good advice I'd say..

 

Could get a boat listed at up to £50 - £55K or beyond if the OP is cheeky enough.

[Athy]

.

.

 

Fortunately for us our circumstances changed quickly so we could pay off our marine mortgage within 18 months.

 

Massive NHS pay rises eh?

[Guest]

Massive NHS pay rises eh?

 

We wouldn't know.. neither of us work in the NHS any longer.

[matty40s]

We wouldn't know.. neither of us work in the NHS any longer.

 

Perhaps RSL has been hit with mortgage non payments from people who have lost their jobs as a result of the downturn.

When I was made redundant 3 years ago, I wanted to have a payment window, they refused. However, when I asked them to reduce payments for 6 months, and pay back over 12, they agreed, by doing that, I managed not to default and kept the boat.

With the interest rate staying so low for so long, I am about 2 years ahead of my payment plan end date now.

[David Mack]

David Brewer there quoted me on £40,000 over 10 years at a repayment of £374 a month.

 

That looks to be an interest rate of about 2.3%, which is pretty low even for a house mortgage. Marine finance has always been more expensive, so I suspect your original deal was priced on the basis of a conventional mortgage, even if that was not made clear, and hence the reason why it was withdrawn.

 

 

With a 2/3 deposit and security against a boat worth 3 times what the loan is, I am surprised there was a refusal.

 

My guess is they will heavily discount the value of the boat - it may (or may not) still be good security, but in their terms you would be borrowing much more than 33%.

 

 

but personal loans for any purpose (car/boat, they didn't care) run a rate of 16.5% for me ...

 

Ouch!!

 

 

As I can afford the marine mortgage, I would have thought it a no brainer. I have no loans, a perfect rent payment record, a clear credit card and a hefty deposit, but alas, according to them, I can't afford £500 a month.... despite paying £600 rent + £120 Council tax every month now.....

 

Because your situation is not "normal" the people you have been dealing with probably don't have the authority to offer anything different from the usual package. Might we worth asking them to push your application "upstairs" to someone more senior, pointing out your history as a customer, good credit record, the amount of security, the previous mortgage offer etc.

 

David

[Boat&Bikes]

We run a limited company,both directors and often are treated as self employed.We went to RSL earlier this year for a loan, although we never got as far as being refused the saga ran for several weeks being asked for various imformation.Gave in finally and went to our bank manager and was offered funding right away.Having run our company for many years we have gotten used to various companies treating buisness owners as high risk.RSL just seemed yet another of these self important poorly run ones...Good luck itl work out ok in the end i expect.

 

Ian.

[davidc]

why not change your bank see if what you have to offer in tearms of business will tempt another bank. to offer a loan. loyalty means nothing to bank now

[Tam & Di]

why not change your bank see if what you have to offer in tearms of business will tempt another bank. to offer a loan. loyalty means nothing to bank now

 

 

Or at least tell your business relation manager at your present bank that you propose to do so and see if that changes his mind. Can the boat be justified as a business purchase in any way? (sorry, not read the whole thread) That might make it possible for him to circumvent those higher than him.

[jelunga]

One thing that may help you understand a refusal is that every time you apply for a loan or credit, even from a mail order catalogue, they will carry out a credit check. Every check is recorded. So when RSL did theirs for your boat loan they would have seen the previous ones and the large one a few weeks earlier. If you have not been a frequent user of credit before, the new trend of loans will have frightened their credit score system which almost all loan companies use nowadays. Human intervention in loan approval has almost ceased to exist. All info has pumped into the computer which gives the answer.

When I worked for a Finance Co back in the 70s, we used credit scoring. We filled in a little form using machine readable hand written characters. It went off to Head Office in Edinburgh and was fed into the OCR machine. A credit score spewed out. If a human made a decision contrary to the credit score all sorts of forms had to be filled in to justify. And that was 35 yrs ago! Think what it must be like now

 

Thanks for the advice, but we have had a few turns of misinformation along the way. Originally we were cleared to borrow through http://www.pro-am.org/marine-finance.html

 

David Brewer there quoted me on £40,000 over 10 years at a repayment of £374 a month. This equated to £44880 in total as a repayment, all secured against the boat we were buying (worth £70k+). Fantastic - I consequently made the offer to the broker, who accepted. Returning to the above company next day, and in David Brewer's absence from illness, I was asked the address of the property we were securing the loan against. Having run through the conversation previously, I was told that they could not offer a loan in this manner, so it left me to find further funding.

 

No explanation or apology was ever given by David Brewer or Pro-AM, which is poor service by any standard.

 

I had signed contracts with the broker and was due to send a 10% deposit, until RSL came back with a refusal today. Again, the broker has been understanding and given us a little more time to try and get sorted. We're attempting a joint application now as the first was just under my name (sorry if I forgot to mention that earlier).

 

With a 2/3 deposit and security against a boat worth 3 times what the loan is, I am surprised there was a refusal.

 

As a stark comparison, 4 weeks earlier, Nat West approved us for £100,000 over 22 years as a mortgage ( ), but personal loans for any purpose (car/boat, they didn't care) run a rate of 16.5% for me through them which means I pay back a frightening amount at the end of the loan period. Needless to say, as 20 years plus of customer loyalty and a good chunk of money in their bank during that time, I am going to move my accounts as soon as this boat nightmare is resolved.

 

As I can afford the marine mortgage, I would have thought it a no brainer. I have no loans, a perfect rent payment record, a clear credit card and a hefty deposit, but alas, according to them, I can't afford £500 a month.... despite paying £600 rent + £120 Council tax every month now.....

 

We're at our wits end now.....we want the boat we've offered on and don't really want to start the whole searching process again if we can help it....we'll have to see what tomorrow brings I guess.

 

We'll never get out of this recession if the banks don't start loaning again.

[The Bagdad Boatman (waits)]

The credit check marker nearly cost my daughter her mortgage. She used the internet to find the best quote for a car insurance and each one ran a credit check. The bank saw all these credit checks on her and refused the mortgage. It was given only after a lot of hassle.

[Dominic M]

Credit scoring is a very unsatisfactory system. If you have no debt and no credit cards your score is very poor for example, simply because they have so little information to go on. I actually think it is highly intrusive and needs tough regulation. It took me months to get Experian to clear up a stupid error that affected my score some years ago, which only came to light when I was looking at leasing a car.

 

Bear in mind that RSL in turn have to go through underwriters and satisfy their criteria. I've dealt with them frequently and they are a pretty good bunch of people in my experience. Of course no one likes to be refused, and I agree, the self employed are seriously discriminated against when it comes to obtaining any sort of credit. Against that, look at the flak that self cert mortgages attracted when the credit crunch set in in 2007.

[Guest]

Ok we've had a deep conversation with RSL and this is how it works.....

 

Apparently with self employed people it's all based on your tax returns so it's a no-win situation. I pay an accountant to keep my tax liability low by buying equipment for the shop etc, and claiming back everything I can in way of expenses, yet this is the figure they base your loan profile on. I could be withdrawing £10K a month, but if my tax bill is low, I won't get the loan....

 

It's a crazy way of assessing customers but it's how it's run.....

 

At this point we've exhausted every avenue. Self employed = poor risk. Both myself and the Missus are self employed, so we're out of luck.

 

A bummer

 

- but what about lowering your sights a bit and buying something you have already got the funds for or only need to add a little more to as suggested above.

 

Yes £70k (I think that was your figure) will buy you a lovely well speced boat but the money you have already saved will buy you a really nice boat, OK something either a bit older as well specd. or a newer boat you can upgrade to the spec you are aiming for if you wish as you go along.

[matty40s]

A bummer

 

- but what about lowering your sights a bit and buying something you have already got the funds for or only need to add a little more to as suggested above.

 

Yes £70k (I think that was your figure) will buy you a lovely well speced boat but the money you have already saved will buy you a really nice boat, OK something either a bit older as well specd. or a newer boat you can upgrade to the spec you are aiming for if you wish as you go along.

 

 

 

Could the companies not purchase a new (floating) office as part of their depreciable assetts??