Seller Financing in the UK - or Other Advice

[Fizzwizz]

Hi all, I've enjoyed browsing these fora for a while and would like to gain the benefit of your experience, especially if you are from the UK.

I've owned a series of boats throughout my life from a 19 ft wooden dagger board sloop, to a 40 ft GRP flybridge cruiser which the family lived aboard for a year. My daughter took her first steps on the deck in Malta in 2003. All bought cash. In 2005 I traded in my life for a medical degree which was self financed and required the liquidation of our boat. I eventually ended up with a 18ft inshore boat and then was finally relegated to a 12 foot kayak (don't knock it, unlimited range if you have the arms).

I graduated from medical school in 2009 and now work as a Doctor (GP registrar) with a good income. Attempting to rebuild our lives we have started to look into a mortgage, given that we pay rent at nearly £1,000 per month. However, having to start back on the housing ladder we haven't been keen on any of the houses affordable. With this in mind, and our love of boats, my wife started to push towards buying another live aboard boat on a marine mortgage. This seemed the ideal solution for us. We could put our money into something we would own, while preserving our love of sailing and travelling. Thus allowing us to rebuild our equity ready for that retirement cruise.

We reasoned we could easily afford £1,000 - £1,500 per month on repayments. With this is mind we looked at a budget of around £100,000 - £150,000 for a 50 - 60ft ketch. After finally seeing something we liked we approached marine financing but were declined based on what they said was "fairness to the buyer". When I asked for clarification they explained that I was "going from nothing to something". I'm not 100% sure what that was supposed to mean but I feel it is likely because I had no home equity. I found this a little offensive as I hardly consider myself to be coming from nothing. I worked hard to get to my current position, and my family and I sacrificed a lot. Sadly we realised that without financing our dream would be lost. Even more sadly this left us with the choice of either continuing to waste my money on rent, or buy a stater home. Neither of which seemed a move forward for us.

Researching the Internet for a solution I came across "Seller Financing" which appears to be popular in the US, however I've seen none here in the UK. Does anyone have any experience of this in the UK? Does anyone have any other suggestions? In desperation we almost went the free boat route, that is take on a free boat that would cost twice the cost to renovate that it would to buy. I swear I entertained this idea for almost 2 weeks until common sense prevailed.

Many thanks ... Fizz

[David_Old_Jersey]

Originally Posted by Fizzwizz

Hi all, I've enjoyed browsing these fora for a while and would like to gain the benefit of your experience, especially if you are from the UK.

There are few of us here from the UK, fingers crossed someone else will wander along - although I can't directly help (apart from the free thread bump ).....a minor detail like that doesn't usually stop me typing .

Firstly, congrats on the career change into something that took a serious personal commitment (by you and family), in both time and financially .

Secondly, as far as I can gather owner financing not very common in the UK....but I am firmly in the camp of don't ask - don't get .

From what you describe you sound like a decent bet for someone looking to sell in a sticky market (i.e. a steady income and unlikely to b#gger off overnight - and even if you did would be fairly easy to track down. and kneecap? ). Doesn't have to be a lifetime loan either, with the agreement that you re-finance in, say, 3 years. Might be worth getting at least a small loan (from a bank etc) secured on the boat if you can from the getgo, even if you don't actually need it - just so the principle of the boat loan is established so later it becomes simply a question of how much. plus you get a boat loan repayment record to show.

Apart from the time and effort to find someone, would likely limit your choice of boat though.

Might also need a decent deposit - but might not, could even involve a Vendors lender (if they have one) to take over the loan, albeit that might run into another variation of "computer says no" (which you have already received ).....but if you can find someone at a Lender who a) has half a brain and b) is allowed to use it you might get a result. might (welcome to the brave new world of finance ).

I guess you have been over on YBW.com, if not then worth a shot - albeit anything different from the norm (or not endorsed by the Daily Heil) does tend to confuse many of 'em - and some tend to be vocal with that .

Anyway, I wish you well - will PM you a picture of me piles later............

[Fizzwizz]

Originally Posted by David_Old_Jersey

Firstly, congrats on the career change into something that took a serious personal commitment (by you and family), in both time and financially .

Thanks David, though sometimes I wonder if I took a backwards step. It will be many years before I make up for the money spent and the years of lost income

I was just flicking through trying to figure out how to get some pics of my old tubs into the photo library.

Originally Posted by David_Old_Jersey

Apart from the time and effort to find someone, would likely limit your choice of boat though.

Very true, the seller would definitely be in the driving seat, but I guess this is the only incentive for a seller to consider such a deal.

Originally Posted by David_Old_Jersey

Might also need a decent deposit - but might not, could even involve a Vendors lender (if they have one) to take over the loan, albeit that might run into another variation of "computer says no" (which you have already received ).....but if you can find someone at a Lender who a) has half a brain and b) is allowed to use it you might get a result. might (welcome to the brave new world of finance ).

I never considered the possibility, but there may be owners stuck in finance deals they are committed to. There may be the opportunity to take over the payments with a contract stating ownership transfers to me only on successful payment of the boat if no payments are missed etc.

Originally Posted by David_Old_Jersey

Anyway, I wish you well - will PM you a picture of me piles later............

I got the picture of the piles, pretty gruesome I'd say. You could try sitting on an old life ring while at the helm

Thanks ... Fizz

[David_Old_Jersey]

Originally Posted by Fizzwizz

Very true, the seller would definitely be in the driving seat, but I guess this is the only incentive for a seller to consider such a deal.

But going in your favour is that a suitable boat likely won't have mainstream appeal - even in the best of times, so half a chance a Vendor might want to do some sort of deal - them being stuck with Finance could be useful for you, albeit of course important not to later find out that you have been paying off someone else's boat .

Anyway - good luck (and have another free thread bump ).

[Fizzwizz]

I've been having quite a lengthy discussion regarding seller/owner finance with other UK boat owners on another forum. I wonder if there is anyone n the US who has bought/sold a boat via seller/user finance and is prepared to show me a copy of the contract? I'm wondering if a robust UK contract could be drawn up to protect sellers based on the US version.

Many thanks again ... Fizz

[atoll]

just guessing but you might look on some of the uk canal boat forums,where marine mortgages are possibly more common.

welcome to the forum

[Wavewacker]

As to financing, here we certainly have exceptions for those starting out with the perpensity of high incomes and the answer you got is absurd, IMO. Look for other conventional lenders and stress the obvious. You'll be much better off obatining conventional financing than any seller financed deal, IMO.

There are some real issues with seller financing. Real estate is full of crooks that seller finance, declare default and foreclose on the property just to do it all over again. Notes can also be sold and the future holder may be preditory as well. Most issues arise from the servicing of the obligation, collection of payments. I strongly suggest you seek a third party servicer for any significan seller financed note, if you must go this route.

While seller financing is possible, there is ceratinly the risk of the lender's collateral ending up in South Amreica, insurance will be required as with any lender, so you'll need to address such issues in the collateral agreement.

The concern too may be your experience, going from a canoe to a 60' er, that can scare a lender. You might start out with a smaller boat and grow into the one you want.

And, while any yacht as an asset will be better than rent, it is a depreciating asset, a used Rolls will rarely sell for more used than it did new, but it can happen, if you hold it long term. Buying used is certainly the way to go, IMO.

I do know an "investor" in London who would probably be happy to give you some financing advice, conventionally or seller financed. PM me and I'll give you his name and how to contact him.....he is not a direct lender or broker. Good luck!