Thinking about buying a yacht but unsure about yacht financing options? BOAT’s comprehensive guide breaks down everything you need to know about superyacht financing, including loan structures, leasing options, interest rates and key considerations to make your dream yacht a reality.
How does superyacht financing work?
Superyacht financing typically involves securing a loan or leasing agreement from a specialised marine lender. Unlike conventional mortgages, yacht financing considers factors such as the vessel’s age, condition and intended use (private or charter). Lenders often require a significant down payment, and loan terms can range from five to 20 years.
For example, a buyer financing a 60-metre yacht valued at £50 million might secure a loan for £35 million (after a 30 per cent down payment). The lender would use the yacht as collateral, and loan repayment terms would be structured accordingly.
Key financing options for superyachts
Marine Mortgages (traditional yacht loans)
A marine mortgage is the most common way to finance a superyacht. The yacht itself serves as collateral, similar to a home mortgage. Interest rates vary depending on the loan amount, vessel age and the borrower's financial standing.
Example: You purchase a yacht for £30 million. The bank requires a 40 per cent down payment (£12 million) and finances the remaining £18 million over 15 years at a five per cent annual interest rate. Monthly payments would be around £142,000, excluding maintenance, insurance and crew costs.
Pros
- Long repayment periods (typically up to 20 years)
- Competitive interest rates for financially strong borrowers
- Fixed or variable interest rate options
Cons
- High down payments (typically 20-50 per cent)
- Strict insurance and valuation requirements
Leasing agreements
A leasing agreement allows buyers to use the yacht while making structured payments over a set period, with the option to buy at the end of the lease. This method is often used for tax efficiency and asset protection.
Example: You lease a yacht for £40 million over a five-year term. Instead of purchasing outright, they make monthly payments based on a structured lease, reducing capital outlay (the initial cost of investment) and allowing for tax advantages in certain jurisdictions.
Pros
- Potential tax benefits
- Lower upfront costs
- Flexibility to upgrade or switch yachts
Cons
- Higher overall cost compared to outright purchase
- Usage restrictions may apply
Asset-based lending
For ultra-high-net-worth individuals (UHNWIs), asset-based lending is an attractive financing method. This approach allows buyers to use their existing assets (real estate, stock portfolios, artwork, etc.) as collateral to secure a yacht loan.
Example: You want to finance a yacht worth £80 million. Instead of using a marine mortgage, you secure a £50 million loan using your real estate portfolio as collateral.
Pros
- Lower interest rates compared to unsecured loans
- No need to liquidate investments
Cons
- Requires significant existing assets
- Risk of asset forfeiture if payments are missed
Charter-based financing
If a buyer plans to charter their superyacht, lenders may offer financing based on projected charter revenue. This approach helps offset operational costs and loan repayments.
Example: A charter yacht generates £350,000 per week during peak season. With an annual charter revenue of £6 million, a lender may offer a financing package based on projected earnings, allowing the owner to cover a significant portion of expenses.
Pros
- Generates income to offset costs
- Can reduce personal financial burden
Cons
- Chartering requires strict operational management
- Yacht must meet commercial regulations and standards
Factors affecting yacht financing
Down payment requirements
Down payments typically range from 20-50 per cent of the yacht’s value. A newer yacht may require a lower down payment, while older yachts may require more due to depreciation concerns.
Interest rates
Interest rates vary depending on the lender, borrower’s financial profile and market conditions. Typical rates range from 4-7 per cent, but UHNWIs may secure lower rates with strong financial backing.
Loan terms
Loan repayment periods range from 5-20 years. Shorter terms result in higher monthly payments but lower total interest paid.
Insurance requirements
Full hull and liability insurance is mandatory. Additional coverage for crew welfare, environmental damage and piracy may also be required.
Tax and registration considerations
VAT and import duties vary by location. Registering under specific flag states (Cayman Islands, Malta and Isle of Man, for example) can offer tax advantages.
Choosing the right lender
Superyacht financing is a niche market, so working with experienced lenders is essential. Leading institutions specialising in yacht financing include:
- Private banks: Offer customised lending solutions for UHNWIs.
- Specialist marine lenders: Provide yacht-specific loans with flexible repayment terms.
- Leasing companies: Offer tailored lease-purchase agreements with tax benefits.
For more expert superyacht tips and essential yachting advice, explore our latest yacht advice guides.