8 Things You Should Know Before Financing Your Boat with a Homeowner Loan

Are you looking to buy a boat?

From expensive yachts for the super rich to barges and smaller craft, boat sales have picked up in 2010. According to recent reports, an astonishing twenty-eight super yachts were sold during the first two months of 2010, reaching around €300 million in accumulated worth.

However, financing your boat purchase can be a problem in a difficult economic climate. One popular method is to use a homeowner loan to raise the cash needed for your boat purchase. Here are eight things you should know before financing your boat with a secured loan.

You Need Equity in Your Home

A homeowner loan requires you to have some equity in your property. You will generally need around 25 per cent equity in your home to qualify for a secured loan.

The amount of money that you can borrow will generally be determined by your income, your credit standing and by the amount of equity that you have in your home.

You May Have to Prove Your Income

Homeowner loans are similar to mortgages in many respects. They are secured on your property, paid back over a term of your choice and have similar underwriting criteria. This means that you may have to provide proof of your income to prove that the secured loan for your boat purchase is affordable.

The Lender Will Take a Legal Charge over Your Home

As a homeowner loan is secured on your property, the lender will take a ‘second charge’ over your property. This means that they have a legal interest in your home – just like your mortgage lender. Using a homeowner loan to finance your boat purchase therefore means that the lender has a legal claim on your home.

Your Mortgage Company May Have to Give Their Approval

Your mortgage lender will generally have the first legal charge over your home. This means that they can take you to court if you fail to keep up the repayments on your secured boat loan.

When you take out a homeowner loan, your mortgage company will typically have to consent to another ‘second charge’ being put on the property.

You May Lose Your Home if You Don’t Keep Up Repayments

When you use a homeowner loan to finance the purchase of a boat, the lender will take a legal charge over your home. This means that if you do not keep up repayments on the secured loan, the lender can take you to court to recoup their money.

This can mean that your home will be at risk if you do not keep up repayments on your boat loan.

You Can Typically Choose the Term of the Loan

When taking out a homeowner loan to buy a boat, you can typically choose the term of the loan. You can spread your repayments over a term you are comfortable with to make the payments affordable.

You Can Generally Pay Back the Loan Early

Most homeowner loans permit you to repay the loan before the end of the term with minimum penalties. For example, if you sell your boat after a couple of years, you can generally repay your homeowner loan straight away.

You Can Use the Money for Any Type of Boat

Very few homeowner loans stipulate on what you must spend the proceeds of the loan. So, whether you want to finance a rowing boat, a barge or a super yacht, you can use a homeowner loan to fund your vessel.

To use your home to raise money at a competitive APR, please fill this homeowner loan form.