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Old 12-08-2020, 19:16   #1
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Question Realistic expectations for financing a 24 month trip. Canada.

Fellow Canadians. I have a life dream of doing a big trip around South Pacific starting and ending in Vancouver. I want this trip to last 18 to 24 months and will be selling the boat and returning to a boring life after that. So I approach this more as an "extended vacation with work", instead of a complete lifestyle change. Without any financing I want to set sail in 4-5 years.

Budgeting about 80-100k for the boat including any upgrades.
My office has agreed to let me work remotely for reduced wage / time commitments. Monthly cash flow should be in the 2-3k range.

With that in mind. I would like to explore financing to make this trip happen sooner before they shove me behind a bigger desk.
What are the expectations for financing a boat?
What are the typical down payments? 20%, 50%? Expected Rates?
Restrictions on locations or dates?
I assume CYA Offshore Standard training and good insurance are required.
And is there any good banks that specialize in this or loan brokers I can talk to.

Cheers,
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Old 12-08-2020, 19:25   #2
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Re: Realistic expectations for financing a 24 month trip. Canada.

First question: would the financial company let you "run away" with their collateral?
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Old 12-08-2020, 19:39   #3
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Re: Realistic expectations for financing a 24 month trip. Canada.

Sorry, not sure what your getting at. Of course no bank just gives out money for nothing.
I assume some hefty insurance and maybe tracking devices will be needed.
Is financing not an option for blue water cruising?

Just trying to get a rough overview of what to expect. If financing is a PITA I still plan to do this trip purely on cash, it'll just take longer to depart.
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Old 12-08-2020, 19:54   #4
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Re: Realistic expectations for financing a 24 month trip. Canada.

Financing a boat with the intention of extensive travel will be difficult or pretty high interest rates. If you could take a collateral loan against investments, or property, that would be easier and cheaper.
By working remotely, I imagine you would need communication or internet? That passage will be weeks of open water, and from what I have heard(haven't personally sailed Pacific side) most of the islands are pretty poor internet speeds.
It's fantastic that your company will allow this sort of adventure, and good luck with it. But I think you have some big hurdles to get over for this to work
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Old 12-08-2020, 20:00   #5
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Re: Realistic expectations for financing a 24 month trip. Canada.

Quote:
Originally Posted by jack4566 View Post
Fellow Canadians. I have a life dream of doing a big trip around South Pacific starting and ending in Vancouver. I want this trip to last 18 to 24 months and will be selling the boat and returning to a boring life after that. So I approach this more as an "extended vacation with work", instead of a complete lifestyle change. Without any financing I want to set sail in 4-5 years.



Budgeting about 80-100k for the boat including any upgrades.

My office has agreed to let me work remotely for reduced wage / time commitments. Monthly cash flow should be in the 2-3k range.



With that in mind. I would like to explore financing to make this trip happen sooner before they shove me behind a bigger desk.

What are the expectations for financing a boat?

What are the typical down payments? 20%, 50%? Expected Rates?

Restrictions on locations or dates?

I assume CYA Offshore Standard training and good insurance are required.

And is there any good banks that specialize in this or loan brokers I can talk to.



Cheers,

Insurance will be mandatory if you have a loan on the boat where the boat is the security. Insurance will not cover you during cyclone season, so that limits your movements. If you don’t have any offshore sailing experience then you might not even be covered for the passages.

Your cheapest (and possibly only) option is to have or apply a revolving line of credit onto your home and use available credit within the LOC to pay for your boat.

Working remotely will not be possible for large parts of your voyage unless you can afford $$$ for satellite broadband. Many places will have local cellular service, but it won’t be available at all anchorages and certainly not at remote islands. If you need to stay near cellular coverage you will miss a lot.

If you really only want to spend 18-24 months then I recommend you plan a one-way trip to NZ or Australia. The return trip via Tahiti and Hawaii or Guam and the North Pacific are a lot of sailing.

Given the Covid situation, probably no point planning anything before 2 or 3 years from now, so you might be able to avoid financing.

Leave Vancouver April/May, arrive Marquesas May/June, traverse French Polynesia, Cook Islands, Niue and Tonga until October, then sail for New Zealand for the southern summer to avoid cyclone season starting 1 November. Sail and/or land tour NZ, then sail back to Tonga (if you want to spend more time there) or Fiji in April/May (12 months so far).

Spend 5 months (Tonga), Fiji, Vanuatu and New Caledonia, then return to NZ or go on to Australia. You can sell in either country. In November you’ll be at 18 months.

If you don’t sell, then after another southern summer, you can sail home from Australia via Solomon Islands, Guam and then the North Pacific, or from NZ via Tahiti and Hawaii. In either case you depart April/May and plan about 3 months (this portion will be delivery mode, not cruising). You’ll be home in 27 months. Not sure the fall is the best time to sell in the PNW.

Have fun planning. If you don’t have much sailing experience spend the next year or two training and getting certified. As an insurance broker what experience will be needed.
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Old 12-08-2020, 20:24   #6
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Re: Realistic expectations for financing a 24 month trip. Canada.

Quote:
Originally Posted by jack4566 View Post
Sorry, not sure what your getting at. Of course no bank just gives out money for nothing.
I assume some hefty insurance and maybe tracking devices will be needed.
Is financing not an option for blue water cruising?

Just trying to get a rough overview of what to expect. If financing is a PITA I still plan to do this trip purely on cash, it'll just take longer to depart.
If the boat is collateral for the load and you take it out of the country, it becomes very hard to repossess, knowing this the bank may make you pay it off first, disallow the trip or charge an exorbitant interest rate.

Have you scoped out a route yet?

I looked at going to New Zealand and back with my family from San Diego and that worked out to 18mo at the low end, 16mo would have been the bare minimum.
-Going was Marquesas, short stays on minor islands, American Samoa (repairs & no customs for boat parts), more minor islands, Tonga, NZ.
-4mo layover for repairs, diddling around NZ and most importantly sitting out typhoon season.
-Return was Chatham Islands, Rapa Iti, Tahiti, Hawai'i, SD.

Returning thru Tahiti instead of on the way out decreases upwind sailing to HA. Also hitting the Marquesas on the return would have meant sailing around the Tuamotus to get there and that's a place to be very careful about. If I was going to sail there it would be from Tahiti or the Marquesas which are close rather than at the end of a long passage when folks are tired and not at their best.

I came up with a spread sheet to plan, made slightly conservative assumptions about average speed, and paid close attention to World Cruising Routes by Jimmy Cornell.

Keep in mind if you go thru Cabo San Lucas, you add 700nm getting there and save about 250nm on your passage to Hiva Oa compared to direct from San Diego.

If you want to go thru the Galapagos, you are adding right about 3000nm to the San Diego to Hiva Oa distance.

With 24mo you can plan to see some very interesting places, but you will need to pick and choose, try to see them all and there won't be time or you will stretch things and get caught in storm season.
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Old 12-08-2020, 21:05   #7
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Re: Realistic expectations for financing a 24 month trip. Canada.

Thanks for the fast thoughts chris mac, fxykty, and Adelie.

Ambitiously my plan involves a full circle of the Pacific rim of fire, Vancouver > Galapagos> Tonga > Papua > Indonesia > Philippines > Korea > Japan > Alaska> Vancity. Avoiding any big places I can fly to on vacation like NZ, Thailand. After reading the world cruising book i believe its possible if you stay hard on the sheets.

fxykty and Chris, I work with Iridium every day so I have connections but I also have confidence Starlink will be in full service in the next few years.

Its sounding like financing is going to be a royal PITA. I wont have any collateral since the plan is to sell the boat for a mortgage.

So any of these guys with financed cats and fancy boats. Are they using other assets as collateral? Surely people are not buying 200k+ boats on cash.
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Old 12-08-2020, 21:31   #8
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Re: Realistic expectations for financing a 24 month trip. Canada.

That’s a tough route to begin with. Trying to do it in 24mo will just add to the misery.
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Old 12-08-2020, 21:32   #9
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Re: Realistic expectations for financing a 24 month trip. Canada.

Keep in mind that insurance will dictate that you need to be out of hurricane zones during the season. Your 24 months can quicky turn into 12 months of sailing. You could go back to work during hurricane season. They can also deny coverage if you don't have qualified crew for passages. It's all in the fine print.

Out of the many cruisers I've met, most are retired couples with paid for boats. I've only met one with a boat loan. The younger crowd gets older, smaller depreciated boats. Often returning to work for six months a year.
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Old 12-08-2020, 22:24   #10
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Re: Realistic expectations for financing a 24 month trip. Canada.

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That’s a tough route to begin with. Trying to do it in 24mo will just add to the misery.

Agree, way too much distance for the time and the speed of boat you’ll be able to get for 100k.

Do you know how to sail? Do you even know that you’ll like it? This route is a sailing route and not so much a cruising route in the time you’re giving it. We’re planning 11 years for a similar route, though including South America and much more of the South, Central and SE Pacific.

As others have pointed out, financing on an older yacht with plans to take it offshore raises all sorts of red flags for a financial institution. That’s just the way it is. You’ll have to go to a second or third tier lender and rates will be similar to an unsecured personal loan.
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Old 12-08-2020, 23:44   #11
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Re: Realistic expectations for financing a 24 month trip. Canada.

Yes for sure this is an adventure with a goal, not just drinking on the beach! Ill probably be shopping for a slimmer racing/cruiser style boat with low beam and draft.

I have also considered The Clipper race but I still want to enjoy some some beach time.

I currently have CYA Advanced cruising standard, soon to be Offshore with plenty enough experience to know what i'm signing up for doing multiple crossings in typhoon affected areas.

Thanks for the feedback. For now I'm just in saving mode as we all wait for covid crap to be done then ill be getting more certifications and crewing where I can.
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Old 13-08-2020, 00:13   #12
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Re: Realistic expectations for financing a 24 month trip. Canada.

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Agree, way too much distance for the time and the speed of boat you’ll be able to get for 100k.

Do you know how to sail? Do you even know that you’ll like it? This route is a sailing route and not so much a cruising route in the time you’re giving it. We’re planning 11 years for a similar route, though including South America and much more of the South, Central and SE Pacific.

As others have pointed out, financing on an older yacht with plans to take it offshore raises all sorts of red flags for a financial institution. That’s just the way it is. You’ll have to go to a second or third tier lender and rates will be similar to an unsecured personal loan.
Purchase price - A standard 6-passenger boat can cost between $20,000 and $30,000, perhaps more for a new model with all the features and accessories (not including interest and fees).
Navigation equipment - Life jackets, paddles and other emergency supplies can be expensive but necessary. That equipment, along with any toys (wake-up boards, inflatables, etc.) can add up to a $500 to $2,000 bill.
License and Insurance - In Canada, you must obtain a recreational boat operator's card to drive any boat with an engine over 10 horsepower. The test costs about $50, plus $20 or $30 per year for the ID card. If you are caught without a valid license, you will be subject to a $250 fine. A basic boat can also cost between $300 and $500 per year to insure (more if a larger model).
Storage - Storage fees at the marina will vary greatly depending on the location, service and size of the boat. It generally costs between $2 and $5 per foot, per month, plus $300 - $700 to wrap it up for outdoor storage during the winter. Indoor storage will be more expensive, about $100 - $500 per month for a 20- to 30-foot boat (more if stored in a stacking facility). A popular marina or yacht club may also charge an introductory membership fee of $5,000 - $10,000 (plus renewals), as well as a monthly cost to rent a ticket during the summer.
Fuel and maintenance - Although these costs also vary depending on the type of boat you have and where you store it, most boat owners pay between 10% and 20% of the purchase price of their boat annually for repairs, cleaning and maintenance. Hopefully, you can save money by storing the boat on your property and performing these tasks yourself.

So not only do you need to get a loan for the boat, but you also need to get a loan to maintain it in good condition so you can sell it for equal amount of money after the journey.

The only solution I see that you sell your house and all your belongings for the sake to finance your trip on your own. You can also take a small loan of 20-30k to not worry about the money during the trip and pay it back after
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Old 13-08-2020, 00:21   #13
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Re: Realistic expectations for financing a 24 month trip. Canada.

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So any of these guys with financed cats and fancy boats. Are they using other assets as collateral? Surely people are not buying 200k+ boats on cash.
It'd be a brave man who bought a boat on finance, but I guess people do. I've never met one yet wherever I've moored in the UK and NZ. Nor a fancy car, for that matter, but that seems way more common in the US.

Yes, insurance and security will be a nightmare with a financed boat. Better plan perhaps to get your head down while Covid still messes with plans, and buy a boat when the world's cruising grounds are a little more predictable.
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Old 13-08-2020, 02:09   #14
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Re: Realistic expectations for financing a 24 month trip. Canada.

Insurace companies fearful of hurricanes, cyclones and typhoons in the Pacific basin have exclusion zones dictated by the specific seasons. This means that you have long waiting periods before you can enter a zone and then restrictions on how long you can remain and get to the next zone.

Look at a calendar charting Vancouveer winter, Hawaii hurricane, Franch Polynesia cyclone, and western Pacific typhoon seasons and you will beginn to realize how difficult the planning is on a short time frame.

Then add in the time it takes to sail 15,000 nm and you will see that your time frame is unrealistic.
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Old 13-08-2020, 08:49   #15
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Re: Realistic expectations for financing a 24 month trip. Canada.

$100k initial means used boat in the 50-75k range. Unlike mortgages and auto loans boat value is unimportant. Any financing will be based on your personal credit so figure 10%+ interest on your financing. Your remote income of 25-35k will be stressed by the payments. I strongly suggest you start much smaller on a learner boat and maximize your savings until you can afford to pay at least half cash on the initial investment.
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