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Your Ultimate Guide to Yacht Financing in Singapore
Have you ever dreamed of owning a yacht in Singapore? If so, you are not alone. According to a report by Wealth-X, Singapore has the highest density of ultra-high-net-worth individuals (UHNWIs) in the world, with 1,361 people who have more than US$30 million in assets. Many of these wealthy individuals are avid boaters who enjoy the luxury and freedom of sailing in the waters around Singapore and beyond.
Owning a yacht in Singapore has many benefits. You can escape the hustle and bustle of the city and enjoy the tranquility and beauty of nature. You can explore the nearby islands and destinations, such as Malaysia, Indonesia, Thailand, and the Philippines. You can also host parties and events on your yacht, impressing your friends, family, and clients. Moreover, you can use your yacht as an investment, renting it out to other boaters or chartering it for tourism and business purposes.
However, buying a yacht in Singapore is not a cheap affair. Depending on the size, model, and condition of the yacht, the price can range from hundreds of thousands to millions of dollars. Not to mention the additional costs of maintenance, insurance, registration, berthing, and crew. Unless you have a lot of cash on hand, you may need to look for alternative ways to finance your yacht purchase.
That’s where yacht financing comes in. Yacht financing is a type of loan that allows you to buy a yacht with a fixed or variable interest rate and a repayment period of several years. Yacht financing can help you achieve your dream of owning a yacht without breaking the bank or liquidating your assets. It can also offer you some tax benefits, depending on your situation and the type of yacht you buy.
In this article, we will guide you through everything you need to know about yacht financing in Singapore. We will explain what yacht financing is and how it works, compare different types of yacht financing options available in Singapore, and discuss some common challenges and pitfalls of yacht financing and how to avoid them. By the end of this article, you will have a clear understanding of how to finance your yacht purchase in Singapore and enjoy the perks of being a yacht owner.
What is yacht financing and how does it work?
Yacht financing is a form of secured loan that allows you to borrow money from a lender to buy a yacht. The lender will use the yacht as collateral, meaning that if you fail to repay the loan, the lender can repossess the yacht and sell it to recover the debt. Yacht financing is similar to car financing or mortgage financing, except that the loan amount, interest rate, and loan term are usually higher and longer, respectively.
To apply for yacht financing, you will need to provide some information and documents to the lender, such as:
- Your personal and financial details, such as your name, address, income, assets, liabilities, and credit score
- The details of the yacht you want to buy, such as the make, model, year, condition, and price
- The details of the seller or broker of the yacht, such as their name, address, and contact information
- The details of the insurance and registration of the yacht, such as the policy number, coverage, and expiry date
- The details of the berthing and maintenance of the yacht, such as the location, cost, and frequency
The lender will then evaluate your application and determine whether to approve or reject it. The lender will also decide the interest rate and loan term of the yacht financing, based on several factors, such as:
- Your credit history and score, which indicate your ability and willingness to repay the loan
- Your income and debt-to-income ratio, which measure your financial stability and affordability of the loan
- Your down payment, which is the amount of money you pay upfront for the yacht purchase
- The value and condition of the yacht, which affect the resale value and risk of the loan
- The market demand and supply of yachts, which influence the price and availability of the loan
Generally, the higher your credit score, income, and down payment, and the lower your debt-to-income ratio, the lower the interest rate and the longer the loan term you can get. Conversely, the lower your credit score, income, and down payment, and the higher your debt-to-income ratio, the higher the interest rate and the shorter the loan term you can get.
The interest rate of yacht financing can be either fixed or variable. A fixed interest rate means that the interest rate remains the same throughout the loan term, regardless of the market conditions. A variable interest rate means that the interest rate changes according to the market conditions, such as the prime rate, the base rate, or the LIBOR rate. A fixed interest rate offers you more certainty and stability, while a variable interest rate offers you more flexibility and potential savings.
The loan term of yacht financing can range from 5 to 20 years, depending on the loan amount, interest rate, and repayment schedule. The loan term affects the monthly payment and the total interest cost of the loan. The longer the loan term, the lower the monthly payment and the higher the total interest cost. The shorter the loan term, the higher the monthly payment and the lower the total interest cost.
What are the different types of yacht financing options available in Singapore?
There are different types of yacht financing options available in Singapore, each with its own pros and cons. Here are some of the most common ones:
- Bank loan: A bank loan is a type of yacht financing that you can get from a bank or a financial institution. A bank loan usually offers you a competitive interest rate and a long loan term, as well as some tax benefits if you use the yacht for business purposes. However, a bank loan also requires you to have a good credit score, a high income, a low debt-to-income ratio, and a large down payment. Moreover, a bank loan may have some fees and charges, such as origination fees, processing fees, appraisal fees, and prepayment penalties.
- Broker loan: A broker loan is a type of yacht financing that you can get from a yacht broker or a dealer. A broker loan usually offers you a convenient and fast approval process, as well as some discounts and incentives if you buy the yacht from the same broker or dealer. However, a broker loan also requires you to pay a higher interest rate and a shorter loan term, as well as some commissions and markups to the broker or dealer. Additionally, a broker loan may have some limitations and restrictions, such as the type, age, and condition of the yacht you can buy.
- Peer-to-peer loan: A peer-to-peer loan is a type of yacht financing that you can get from an online platform that connects borrowers and lenders. A peer-to-peer loan usually offers you a flexible and customized interest rate and loan term, as well as some privacy and anonymity if you prefer. However, a peer-to-peer loan also requires you to pay a higher risk premium and a higher default rate, as well as some fees and charges to the platform. Furthermore, a peer-to-peer loan may have some uncertainties and risks, such as the reliability and legality of the platform and the lenders.
Some examples of yacht financing providers in Singapore are:
- DBS Bank : DBS Bank is one of the leading banks in Singapore that offers yacht financing for both new and used yachts. DBS Bank offers a fixed interest rate of 4.88% per annum and a loan term of up to 15 years, with a minimum loan amount of S$200,000 and a maximum loan amount of 70% of the yacht price.
- Neo Yachting : Neo Yachting is one of the reputable yacht brokers in Singapore that offers yacht financing for both new and used yachts. Neo Yachting offers a variable interest rate of 6% to 8% per annum and a loan term of up to 10 years, with a minimum loan amount of S$100,000 and a maximum loan amount of 80% of the yacht price.
- Funding Societies : Funding Societies is one of the popular peer-to-peer lending platforms in Singapore that offers yacht financing for both new and used yachts Funding Societies offers a variable interest rate of 8% to 12% per annum and a loan term of up to 5 years, with a minimum loan amount of S$50,000 and a maximum loan amount of 60% of the yacht price.
What are the common challenges and pitfalls of yacht financing and how to avoid them?
Yacht financing can be a great way to buy your dream yacht in Singapore, but it also comes with some challenges and pitfalls that you need to be aware of and avoid. Here are some of them:
- Overborrowing : Overborrowing is the situation where you borrow more money than you can afford to repay. This can happen when you underestimate the costs of owning and operating a yacht, such as maintenance, insurance, registration, berthing, and crew. Overborrowing can lead to financial stress, default, and repossession of your yacht. To avoid overborrowing, you need to plan your budget carefully and realistically, and only borrow what you need and can repay comfortably.
- Underinsuring: Underinsuring is the situation where you have insufficient or inadequate insurance coverage for your yacht. This can happen when you overlook the risks and liabilities of owning and operating a yacht, such as accidents, damages, theft, vandalism, and lawsuits. Underinsuring can lead to financial losses, legal troubles, and personal injuries. To avoid underinsuring, you need to research your insurance options thoroughly and comprehensively, and choose the policy that suits your needs and budget.
- Overpaying: Overpaying is the situation where you pay more money than the fair market value of the yacht. This can happen when you lack the knowledge and experience of buying and negotiating a yacht, or when you fall victim to scams and frauds. Overpaying can lead to financial regrets, depreciation, and negative equity. To avoid overpaying, you need to do your homework and due diligence, and consult a professional yacht broker or appraiser before buying a yacht.
- Undermaintaining: Undermaintaining is the situation where you neglect or delay the maintenance and repair of your yacht. This can happen when you underestimate the importance and frequency of keeping your yacht in good condition, or when you try to save money by cutting corners or doing it yourself. Undermaintaining can lead to mechanical failures, safety hazards, and reduced performance and value of your yacht. To avoid undermaintaining, you need to follow the manufacturer’s recommendations and schedule, and hire a qualified and reputable yacht service provider to maintain and repair your yacht.
Owning a yacht in Singapore can be a rewarding and enjoyable experience, but it also requires a significant financial commitment and responsibility. Yacht financing can help you buy your dream yacht in Singapore without breaking the bank or liquidating your assets, but it also involves some challenges and pitfalls that you need to be aware of and avoid.
In this article, we have guided you through everything you need to know about yacht financing in Singapore. We have explained what yacht financing is and how it works, compared different types of yacht financing options available in Singapore, and discussed some common challenges and pitfalls of yacht financing and how to avoid them.
We hope that this article has given you a clear understanding of how to finance your yacht purchase in Singapore and enjoy the perks of being a yacht owner. If you have any questions or need any assistance with yacht financing, please feel free to contact us at BASCO Boating. We are the most reliable and effective boating platform in Asia-Pacific, and we are here to help you achieve your innermost dreams about life at sea.
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We offer flexible financing solutions for your yacht purchase. With our expertise in yacht financing, we can help you secure a loan of up to 50% of the yacht's value. Our competitive interest rates make yacht ownership more affordable than ever. As the only provider of yacht financing in Singapore, we are committed to helping you make your dream of owning a yacht a reality.
Ready to explore the world of yacht ownership? Get in touch with us today to learn more about our flexible financing options. We are here to help you make your yacht dreams come true.
With relatively low interest rates in Singapore at the moment, financing may be a good option for boaters looking to purchase their dream boat. You can loan up to 70% of the price of the boat, depending on your income level and residency status. TheBoatShopAsia can also arrange Co-ownership and co-financing for those wanting to get into the boating lifestyle as a pair or in a group. We can also help manage the usage of your shared boat, by providing scheduling services, post-trip inspection and even key-drops for greater convenience!
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The future growth of Maritime Singapore
22 Nov 2021
Find out how Singapore’s maritime sector is transitioning, and the role innovative financing can play.
What must Singapore do to retain its status as the world’s busiest transshipment hub 1 in the face of challenges posed by COVID-19, and a changing global landscape? At the Marine Money Week Asia 2021 conference in Singapore, Quah Ley Hoon, Chief Executive of the Maritime and Port Authority of Singapore (MPA), shared insights with Abhishek Pandey, Global Head of Shipping at Standard Chartered, on Maritime Singapore’s vision for achieving this through a high-tech port ecosystem, and by accelerating decarbonisation.
The future of the port of Singapore
More than 80% of goods are transported by ship 2 ; and Singapore is an important global node in that process. Singapore is the world’s busiest container transhipment port, and has been ranked as the world’s leading port and top maritime centre by the Xinhua-Baltic index for the past eight years. 3 It receives many vessel calls annually 4 and hosts some 5,000 maritime businesses, 5 ranging from ship owners and operators to broking and chartering services, to port operations agencies, to marine insurers and reinsurers. 6,7
At the same time, Singapore’s maritime industry faces several challenges, and the pandemic has exacerbated them. These include the need to improve intermodal connectivity 8 – which affords a range of transport alternatives that unconnected systems do not – to retain and enhance the city’s share of global container traffic 9 ; expedite the process of digitalisation across the sector; and attract, retain and upskill talent in a rapidly changing industry. 10
The MPA has had to deal with these issues as part of its overarching mandate to develop the country’s status as the gateway to Asia. In turn, the agency sees its role as building a strategic partnership with the maritime ecosystem rather than simply setting rules for businesses within it. “The MPA is one of the few agencies in the world that acts as both a regulator and a promoter,” Ley Hoon told the conference, while adding that it is not always easy to strike a balance between the interests of different parties.
The ongoing pandemic, for example, has required the MPA to straddle the conflicting priorities of maintaining Singapore’s status as a global shipping hub and shielding its citizens from external sources of infection at the same time. To this end, the government has introduced the Sea Crew Vaccination Initiative, whose aim is to work with shipping companies and unions to vaccinate as many seafarers as possible, including non-resident ones, 11 while also putting in place safe crew change procedures. Nevertheless, the disruption to supply chains caused by the pandemic has demonstrated why it is now so important to remove friction points that slow down the world’s trade.
Digital processes can minimise friction
Digital innovation is seen as central to the effort to remove supply chain bottlenecks. “First, we need interoperability,” Ley Hoon told the conference. “We actually see shipping in Singapore not just as ‘shipping’ or ‘transporter’, but as a key component of the global supply chain, meaning therefore that there must be integration and interoperability with logistics players.”
This interoperability requires different digital platforms to be able to talk to one another, for instance, between the platforms used by shipping companies, shipping agents and logistics operators. “I was once told that there are 18 touchpoints across the entire global supply chain,” she said. “[We] can only advance as fast as the weakest link, meaning that everyone needs to level-up.”
The MPA’s strategy for driving this interoperability revolves around digitalOCEANS™, an initiative that facilitates cross-border data exchange and automated services between supply chain participants, clearance authorities and other national windows. 12 The idea is that digitalOCEANS™ will forge system-to-system interoperability that forgoes the need for form-based submissions so that when a ship or cargo needs clearance, the system is as seamless and paperless as it possibly can be.
“We are looking at how to enhance connectivity all the time, and that includes layering physical connectivity with digital connectivity,” Ley Hoon said.
Green finance to the rescue
However, this hyper-connectivity places greater demand on the investments required across the supply chain. As Abhishek pointed out: “Most of the well-known European shipping banks have either exited shipping or curtailed their operations and returned to their core markets, leaving a gap.”
One way of filling this gap is the rapidly expanding world of green finance. Decarbonisation is now a significant priority for the shipping industry, and many companies have dedicated teams to determine the best path forward. In August, the MPA established the Global Centre of Maritime Decarbonisation (GCMD) with SGD120 million fund from MPA and six founding partners. GCMD is dedicated to collaborating with the industry to explore ways to reduce emissions in the sector. 13
Singapore is also leading efforts to promote the use of greener fuels such as LNG and funding research to develop zero-carbon fuels. 14 In addition, the MPA is looking at building waterfront facilities in Singapore to support the Global Centre for Maritime Decarbonisation’s research and testing of green marine technologies.
The second strand of support is the MPA’s Maritime GreenFuture Fund, an SGD40 million (USD30 million) pot of money that will support this kind of R&D activity. 15 The GreenFuture fund can be particularly helpful to small and medium-cap firms who may find it difficult to source affordable lending from a bank. One example is electrified harbour craft, with three consortia awarded funding to research these low-carbon vessels. 16
There is also potential for Singapore to develop its capabilities in maritime green financing, by leveraging the existing green finance strengths of the nation. Parallels can be drawn from how MPA grew Singapore’s MarineTech ecosystem, where angel investors and venture capitalists were brought in to be matched with start-up companies based on the unique suite of needs from each of the organisations. The future Green Ship Finance Hub in Singapore can potentially explore the growth of these connectors and intermediaries such that companies of all sizes with project proposals can be linked with financiers, thereby increasing financing flows to our ecosystem of companies.
Standard Chartered, a signatory to the Poseidon Principles, a global framework aligned with the International Maritime Organization’s goal to reduce the shipping industry’s total annual GHG emissions by at least 50% by 2050, 17 is likewise working to extend sustainable loans to shipping companies that are investing in technologies that reduce their carbon footprints. 18
The need for multi-faceted solutions – technological, financial, regulatory, cultural – explains the importance of umbrella concepts such as Maritime Singapore, which can unify these different strands under a common agenda, solving complex problems in the process. This disciplined, coherent approach has driven Singapore to its current status as a world-class shipping hub, and is likely to form the basis of its future success.
1 http://www.maritimesingapore.sg/about-maritime-singapore/ 2 https://unctad.org/topic/transport-and-trade-logistics/review-of-maritime-transport#:~:text=Around%2080%25%20of%20the%20volume,higher% 20for%20most%20developing%20countries. 3 https://www.balticexchange.com/en/news-and-events/news/press-releases-/2021/singapore-tops-international-maritime-centre-rankings.html 4 https://www.mpa.gov.sg/web/portal/home/maritime-singapore/introduction-to-maritime-singapore/premier-hub-port 5 https://www.mpa.gov.sg/web/portal/home/maritime-companies 6 http://www.maritimesingapore.sg/maritime-industry-overview/ 7 https://www.mpa.gov.sg/web/portal/home/maritime-singapore/what-maritime-singapore-offers/global-maritime-services/marine-insurance-services 8 https://www.spglobal.com/platts/en/market-insights/latest-news/shipping/011421-singapores-2020-maritime-performance-resilient-despite-global-covid-19-hurdles-minister 9 https://theloadstar.com/singapore-eyes-rebound-in-intermodal-traffic-after-2020-box-volume-dips/ 10 https://www.mpa.gov.sg/web/portal/home/media-centre/news-releases/detail/e441e601-6021-466f-a47a-ed4348768534 11 https://www.straitstimes.com/singapore/transport/singapore-to-offer-covid-19-vaccines-to-non-resident-foreign-seafarers 12 https://www.mpa.gov.sg/web/portal/home/maritime-singapore/what-maritime-singapore-offers/digitaloceans 13 https://www.mpa.gov.sg/web/portal/home/media-centre/news-releases/detail/bf2aaf98-833a-4515-8f3f-64d534fa36c3 14 https://www.spglobal.com/platts/en/market-insights/latest-news/shipping/011421-singapores-2020-maritime-performance-resilient-despite-global-covid-19-hurdles-minister 15 https://www.sgpc.gov.sg/media_releases/mpa/press_release/P-20210203-1 16 https://www.porttechnology.org/news/mpa-and-smi-award-funding-for-electric-harbour-vessel/ 17 https://www.globalmaritimeforum.org/poseidon-principles 18 https://www.globalmaritimeforum.org/poseidon-principles
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How Much Does It Cost To Own a Boat or a Yacht in Singapore?
Cruising the seas on a yacht is the ultimate in luxury, as those folks with their very own super yachts berthed at Sentosa Cove’s marina would know.
Owning a boat is obviously not cheap the way a shopping spree at Daiso would be, but it does not have to cost millions either.
How much is a boat in Singapore?
Boats come in all shapes and sizes, and the prices can vary wildly. As with cars, a second hand boat costs significantly less than a brand new one.
Generally, prices cost from about $50,000 onwards for a second hand boat. On the other end of the scale, some of the biggest, fanciest yachts with spacious onboard living space can cost over a million bucks.
How much does it cost to berth your boat per month?
Wet berthing costs are generally in the $480 to $1,500 per month range, depending on location and the size of your boat. If you are getting a club membership in order to berth your boat, you might also receive other perks like use of the club’s gym.
Here are the available Marinas in Singapore:
- Marina @ Keppel Bay
- Marina Country Club
- One Degree 15
- Raffles Marina
- Republic of Singapore Yacht Club
- SAF Yacht Club Changi
- SAF Yacht Club Sembawang
- Changi Sailing Club
How to buy a boat in Singapore?
The easiest way is to approach a boat dealer. Dealers usually have a mixture of brand new and second hand boats for sale.
If you are not paying the full cost in cash, some boat dealers will offer their own loans if you are buying one of their boats. Alternatively, you can seek financing by taking out a personal loan .
Maintenance and repairs per month
Your maintenance costs will obviously depend on how frequently and intensively you use your boat. If you use your boat every weekend, you should budget at least $500 to $1,500 per month. This cost includes the cost of fuel and any repairs or replacements that must be made.
Other than mechanical checkups and maintenance, you should also take into account costs such as marina memberships fees, cleaning services and the price of getting your boating license if you do not already have one.
Insurance for a boat
Your boat insurance premiums will depend on factors such as boat model and size, as well as what your boat is being insured for. Most insurers will offer hull coverage, which protects the hull as well as the items attached to or kept and used on the boat, such as marine electronics.
Other features that might or might not be included are cleanup coverage in case of fuel spills, and removal of wrecks. You should also check the limits of the territory in which your boat is insured.
Be prepared to pay at least $1,200 a year for the most basic insurance plans.
How to get a boat licence in the first place?
In order to pilot a boat, you will need a Powered Pleasure Craft Driving Licence.
There are several organisations conducting courses (usually 2 or 3 days long) that will prepare you for the test, namely the following:
- SAF Yacht Club
- ONE15 Marina Club
- Singapore Police Force Aquatic Club
- Singapore Polytechnic
- Singapore Powerboat Association
- Water Venture Changi
To get your licence you will have to pass both a theory and practical test.
Set aside about $350 for the course fees, as well as about $190 for the tests and licence fee, assuming you pass on your first try.
Is a boat or yacht a liability or an investment in Singapore?
Like a car, a boat is a depreciating asset. You will be paying significant costs in order to operate and maintain it, and you are unlikely to be able to sell it at a much higher price than you got it for, unless you are undertaking major restoration or renovation works.
That being said, it is still possible to monetise your boat or yacht by renting it out. For instance, there is quite a bit of demand for weekend yacht parties in Singapore. This does take extra work though, as many yacht rental businesses provide not only a crew but also perks like champagne buckets.
Total cost of owning a boat for a year (minimum)
| Item | Annual cost |
| Getting a boat license (one-time cost) | $540 |
| Cost of a secondhand boat (one-time cost) | $50,000 |
| Berthing cost | $5,760 |
| Maintenance and repairs | $6,000 |
| Insurance | $1,200 |
| Total | $63,500 |
Thinking of buying a boat in Singapore? Share your questions in the comments!
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Financing your yacht
As with many things associated with moving up in class, large yacht finance is a different dance with new steps to learn. Gone are the days when you negotiate a price with a salesman at a boat show and walk down the dock to a stand where you fill out a loan application and receive a floating key fob for your trouble.
Now large yacht finance is a complex transaction typically handled by a bank's private wealth management division or a broker who works with a bank that specialises in this trade. The difficulties that have swept the globe since 2008 have made it marginally more difficult to obtain large-yacht financefewer lenders are engaging in yacht finance and their requirements are tougher but for those with the will and the liquidity, there are ways.
As Lisa Verbit, senior vice president and national marine executive, US Trust, Bank of America Private Wealth Management, says 'Qualified people can still get credit.'
Securing financial packages
Moving up from a small boat to a superyacht involves many layers of added complexity, extra digits in the purchase price and a new financing paradigm. You likely won't be dealing with a traditional lending institution for a 20 year, fixed-rate loan with 20 per cent down based on your credit score.
At values above $5 million or so, you'll likely be dealing with a superyacht specialist to customise a package that accomplishes your goal of acquiring the boat while protecting your liquidity and theirs.
An anecdotal survey of superyacht industry professionals suggests that half to three-quarters of new build and brokerage clients finance some of the purchase price of their yachts, even if they can afford to pay entirely in cash. The decision to finance likely has more to do with a broader financial strategy than the ability to pay.
The decision to finance likely has more to do with a broader financial strategy than the ability to pay
'One of the primary reasons our clients finance is to take advantage of an arbitrage opportunity to be able to earn more by keeping liquid assets deployed into the stock market or some other businesses investment than the cost of borrowing against the yacht,' Verbit says. 'The arbitrage play is more difficult today so we've seen many of our clients pay cash or borrow against their securities portfolios.
'Borrowing against a securities portfolio is less expensive than borrowing against a yacht, but there may also be an opportunity cost to tying up availability under a line collateralised by securities. We expect that some of those clients will seek to monetise their yachts as investment opportunities arise. In fact, we're already seeing a bit of that.'
The yacht finance process generally starts with a conversation about the client's goals, says Verbit. Each client is different, with some seeking truly customised financing, but most fall into one of the bank's standard products.
A typical superyacht financing scenario might involve a loan for 75 per cent of the purchase price of the yacht with payments amortized over 15 years, with a balloon payment due within a period of up to seven years.
A typical superyacht financing scenario might involve a loan for 75 per cent of the purchase price of the yacht
Factors the bank will look at to establish the terms include the size of the loan, the risk profile of the client determined through financial underwriting analysis, and the client's relationship with the bank.
US Trust, Bank of America requires clients provide:
- A personal financial statement dated no earlier than three months prior;
- The last three years of personal federal tax returns, including Schedule K-1 forms;
- Verification of liquidity in the form of bank and/or brokerage statements, including details of account holdings; and
- Three years of financial statements for businesses representing 20 per cent or more of the client’s net worth.
Three years of financial statements for businesses representing 20 per cent or more of the client's net worth.
If the yacht will be owned by a separate entity such as an offshore corporation , the bank also will require copies of the formation documents of the ownership entity.
A year or so before the balloon period matures, the owner and the bank will reassess the owner's goals and intentions. At that time, the owner may decide to renew the financing package.
If all is well with the owner's financials, the bank may choose to renew the package, but likely with a shorter amortization.
Setting the cost
Rates in Verbit's division at are based on LIBOR (London Interbank Offered Rate the average interest rate that leading banks in London charge when lending to other banks). She says yacht finance rates range from about 2 per cent over LIBOR to about 3 per cent.
'The key driver on pricing is the overall financial profile of the client,' Verbit says. 'It's not driven by the nature of the purchase, whether the client is buying a new yacht, a brokerage yacht, or is entering into a new build contract. If a client has a current relationship with us, that will factor into pricing, although a current relationship is not required.'
Securities-based lending is an option most large banks offer. Darran Blake of The Blake Group and senior vice president investments, UBS Financial Services, Florida, says her group uses a strategy called 'collateralised portfolio lending'.
Basically, the bank will monetise against a portfolio with lendable assets in it, such as a stock portfolio, to buy a yacht, a jet or real estate.
'Whatever we can hold in a UBS account, we can lend against,' says Blake. 'Every asset has a specific lending value, but not everything is lendable.'
The UBS program is aimed at those who may have accumulated a healthy stock portfolio or other liquid assets over the course of their careers. The client presents it to the bank, which assesses its value and potential.
If it meets their tests, the owner is presented with what amounts to a credit line with a chequebook he can use to pay for anything he wants (except to buy stocks) be it a new build, a brokerage yacht, or operating expenses.
Among the advantages, says Blake, are that the client doesn't have to sell the stock to pay for the boat and take the tax hit. The loan rate can be locked in at the outset for up to five years, be variable or fixed.
The minimum amount the program will accommodate is $55,000. The maximum is $50 million, although Blake says that limit is not set in stone. The maximum is authorised on the higher side on a case-by-case basis by UBS.
Cash buyers
Those who do choose to finance, might finance up to 80 per cent of the cost of the boat, but that number can vary widely. In a reflection of the diversity of superyacht owners and their individual financial strategies, some industry sources say that nearly all their new-build clients finance some part of their yachts, while others say nearly all pay cash.
Michael Joyce, chief executive of Hargrave Custom Yachts, says prior to the economic downturn in 2008, most of this firm's clients paid cash for construction of a new yacht, but would take notice if loan rates were low enough.
Now, he says, probably half look at the option of financing some, of all, of the actual construction. With brokerage boats, that number may be 35 per cent. He estimates 80 per cent of the buyers of Hargrave vessels, which range in length from 21m to 42m, pay all cash.
'The decision to finance has to do with the personality of the buyer,' says Joyce. 'Many have grown up with the philosophy that if you can't afford to write the check, you shouldn't buy it. [Our yachts] run from $5 million to $20 million, and we don't see any price point that impacts the decision to finance.'
Alternative credit sources
While dealing with institutions that specialise in large-yacht lending and know the vagaries of the business may be a wise course to pursue, a prospective owner can approach his own bank, which may hold his investment portfolio and other loans and with whom he has a strong relationship, or he may consider financing through an engine builder assuming he's talking to one in particular.
Cat Financial, a division of industrial giant Caterpillar, offers ground-up consumer financing for yachts, provided they are equipped with Caterpillar engines. According to Vern Patterson, senior international account manager, Cat Financial, the division offers yacht financing with no ceiling on size.
Verbit says her bank's appetite for yacht loans has not changed since before 2008, nor have approval rates. What they experienced was a lack of demand for yacht loans.
'I can say that we are still in the construction lending business,' she says. 'We're careful about it, as we always have been, but our appetite remains.
'As for brokerage, within the last year we've seen some one-off yacht loan fundings, and some very large deals at that, by banks that are not typically involved in the yacht business. The reason: We all need good loans, and the clients purchasing superyachts are people we all want to bank.'
Milestone Payments
Yacht construction loans are often structured around 'milestone payments'. A lending institution may enter an agreement with a client where the bank finances 70 per cent of the build cost.
The bank will release payments to the yard at clearly defined stages of the build, such as when the keel is laid, the engines are installed, the superstructure is completed or the fairing and painting are done.
At each stage, or milestone, the banks will require a surveyor or project manager to verify the work has been done properly before releasing the funds. The loan will be interest-only during construction.
Irrevocable Commercial Letter of Credit
International commerce revolves on letters of credit (LCs).
An LC means that a bank ensures that the yard or seller will not be paid the buyer's money until the bank receives confirmation that the yacht has been delivered in the agreed upon condition and within a specified time frame. It also serves to assure the yard or the seller that the necessary funds will be available when the transaction is complete.
If for some reason the buyer is unable to complete the transaction, the bank is required to cover the full or remaining amount of the purchase, which protects the yard or seller.
In today's global market with the commercial laws differing from country to country and/or a yard's lack of a known track record, an irrevocable LC is generally seen as a safe way to protect the interests of an owner and a lender during yacht construction or a brokerage transaction. A solvent yard can use the buyer's LC as a form of collateral to obtain its own construction financing from its regular lender.
LCs require that the conditions for any draws and final payment are well detailed by someone experienced in construction and contracts rather than a banker or attorney determining if the yard has met the requirements.
One yacht owner told us the LC absolutely protects the yacht owner, not just by minimizing risk, but by eliminating it completely.
'Only when the yacht owner is happy with the product can the bank release money for an LC payment,' he said. 'Your signature is the only way an issuing bank will pay for product.'
Meanwhile, the owner's funds on deposit have been earning interest in that bank.
The caveat is that an LC should be prepared by an lawyer specialising in financial instruments with properly defined trigger terms and key objectives stated within them.
The issuing bank makes payments only when terms are met, taking the owner out of the fray, and in the case of draw payments, frees the owner from having to visit the yard on demand.
Every LC should be tailored to a final execution date and a reasonable delay clause. Any specific quality standards, such as class compliance, should also be stated. Sometimes, stage payments and LCs have been combined to advance capital to the builder with a nominal payment of 15 to 20 per cent. This compromise increases the LC's liquidity for the builder.
Originally published: Superyacht Owners Guidebook 12
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DBS Bank: DBS Bank is one of the leading banks in Singapore that offers yacht financing for both new and used yachts. DBS Bank offers a fixed interest rate of 4.88% per annum and a loan term of up to 15 years, with a minimum loan amount of S$200,000 and a maximum loan amount of 70% of the yacht price.
Get in touch with us today to learn more about our flexible financing options. We are here to help you make your yacht dreams come true. Contact Us. 55 Toh Guan Road East. Uni-Tech Centre #06-04. Singapore 608601. +65-8286 0961. [email protected]. Send Us a Message.
Dive into the intricacies of yacht financing in Singapore, where we demystify the process from bow to stern. Learn about the various financing options available, from traditional loans to bespoke solutions tailored to your nautical ambitions. Discover key insights on interest rates, repayment terms, and eligibility criteria, ensuring you're ...
Yachts are not cheap, and they require a... If you are looking for a way to buy a yacht in Singapore, you might be wondering how to finance such a big purchase.
You can loan up to 70% of the price of the boat, depending on your income level and residency status. TheBoatShopAsia can also arrange Co-ownership and co-financing for those wanting to get into the boating lifestyle as a pair or in a group. ... Republic of Singapore Yacht Club, 52 West Coast Ferry Road, Singapore 126887. info@theboatshopasia ...
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Here are some factors you need to take into account when financing a yacht: Berthing and marina fees. Fuel cost. Maintenance and repair. Insurance. Crew salaries. Gear and accessories. You definitely need a place to dock your yacht, and that will come under the berthing fees.
Benefits. Ease of financing your purchases with flexible loans from 3 to 10 years. Up to 60% of the cost of valuation on a used vessel (whichever is lower). Lighten your working capital sunk into vessel purchases. Competitive interest rates on working capital. Repayment of up to 10 years. Shariah-compliant vessel financing facilities are also ...
Find out how Singapore's maritime sector is transitioning, and the role innovative financing can play. What must Singapore do to retain its status as the world's busiest transshipment hub 1 in the face of challenges posed by COVID-19, and a changing global landscape? At the Marine Money Week Asia 2021 conference in Singapore, Quah Ley Hoon, Chief Executive of the Maritime and Port ...
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Wet berthing costs are generally in the $480 to $1,500 per month range, depending on location and the size of your boat. If you are getting a club membership in order to berth your boat, you might also receive other perks like use of the club's gym. Here are the available Marinas in Singapore: Marina @ Keppel Bay. Marina Country Club.
Our network of allows us to obtain competitive quotations for insurance and financing for the acquisition, construction or refit of yachts. For more details of our Yacht Ownership, Yacht Management and Yacht Administration services and solutions see our dedicated website at
Learn how to secure large-yacht finance from brokers and specialist bankers, and what factors affect the rates and terms of the loans. Find out the advantages and disadvantages of financing your yacht with different methods and sources.
Find your perfect yacht from a wide range of power boats and sailing yachts for sale in Singapore, Malaysia and Thailand. Asia Yacht Brokers offers yacht brokerage, preparation, marketing, financing and delivery services to help you realise your yachting dreams.
Posts: 628. Re: Buying a Boat in Singapore. Consider importing your boat and have it Spore registered - one less than 10yrs old that is. Berth charges vary in Spore so best call them directly ie $/ft, annual fees, sign up fees. Note they are scarce too so best secure your berth before you commit to your boat.
OR. 305-899-2201. Private Yacht Finance specializes in providing private loans to meet your boat financing needs. Designed for individuals that are purchasing expensive, high-quality pleasure crafts and are having difficulty obtaining a boat loan commitment from traditional banks. Credit challenged, unverifiable income, non US citizen, or other ...
Use this tool to calculate your monthly boat loan payments based on loan amount, interest rate and term. Learn how to lower your payments, compare boat loans and personal loans, and find boat financing options.
Estimate your monthly payments or total loan amount for a new or used boat with our online calculator. Apply for a boat loan with Trident Funding, the preferred partner of boats.com, and get approved in 24-48 hours.
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Add a Cosigner: If possible, adding a cosigner to your boat loan application can help. A cosigner with a strong financial profile can improve your chances of approval and might even get you better loan terms. Above: A happy middle-aged couple on a boat, excited they got the right boat loan to make their boating dreams a reality. Image via Pond5.
Adrian takes up a DBS Renovation Loan with a five-year loan tenure 1 at 5.68% p.a. The loan amount was $30,000 2. He completes his loan payments on-time for the first and is eligible for an interest rebate of $821.02 2. This rebate will be credited to his nominated loan servicing account 60 days after his sixth monthly instalment.
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After that, most bank home loans are pegged to the Singapore Overnight Rate Average (SORA). When you take a bank home loan, you will find yourself having to constantly refinance or reprice your fixed home loans every 2 to 3 years. Servicing your bank home loan over a 25-year period means you may have to refinance or reprice your home loan 6 to ...