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Loans

Overview

21 July 2015

Last revised

minutes

2

Reading time

The loan finance business model is as simple as it sounds: the owner borrows part of the purchase price from a bank or other lender, and is the legal, registered owner of the yacht. The lender takes security over the yacht. While most yacht loan agreements and associated documentation is complex, most of this relates to the lender’s security.

minutes

2

Reading time

21 July 2015

Last revised

The loan finance business model is as simple as it sounds: the owner borrows part of the purchase price from a bank or other lender, and is the legal, registered owner of the yacht. The lender takes security over the yacht. While most yacht loan agreements and associated documentation is complex, most of this relates to the lender’s security.

  • Lenders typically use their own documentation, which may lack clarity and organization.

  • The loan agreement outlines the availability of funds and conditions for repayment.

  • Security provisions are crucial and can be detailed in the loan agreement and additional documents.

  • Covenants in the loan agreement specify borrower obligations and restrictions, such as the sale and navigation of the yacht.

  • Assignments of rights under insurance policies and charter earnings may be required.

  • The mortgage on the yacht is registered as part of the loan agreement.

  • Guarantees from third-party companies and beneficial owners provide additional security.

  • Covenants and restrictions aim to ensure proper management, operational compliance, and insurance coverage.

  • Choosing English law and jurisdiction is common in the ship finance sector due to expertise and favorable legal conditions.

  • Opting for English law can save costs and promote amicable relationships among parties involved.

  • The mortgage on the yacht is registered as part of the loan agreement.

  • Guarantees from third-party companies and beneficial owners provide additional security.

  • Covenants and restrictions aim to ensure proper management, operational compliance, and insurance coverage.

  • Choosing English law and jurisdiction is common in the ship finance sector due to expertise and favorable legal conditions.

  • Opting for English law can save costs and promote amicable relationships among parties involved.