Question and Answer Regarding Live Aboard Boats and RVs
Below is a question that was asked by a potential client of boatloans.com
This is regarding live aboard boats and information about financing them.
Please feel free to contact us with any questions you may have regarding buying a boat or the boat loan process.
Our staff will do the best we can to get you a answer that will help you make your decisions.
Sent: Friday, March 30, 2012 9:03 PM
Subject: Re: Thank you
Thanks for the note John. I would like to understand why lenders will no longer loan on a boat that is going to be lived on/AKA live aboard? I have good credit and good income and wanted to convert my $1500 a month apartment payment into a slip rental at a marina and a boat loan. I assume its because if anyone was to default, the boat being considered their home, makes it that much harder to collect?
I decided to table my plans since the loan market for boats these days (liveaboards) is very strict if not non existant.
Name Removed per client
Date: Saturday, March 31, 2012, 8:37 AM
I completely understand your frustrations and wish I had a good solution for you. However in October 2010, the government changed some of the laws which govern financial institutions in how they service loans. More specifically, the Federal Reserve Board (“FRB”) published new rules amending Regulation Z which implements the Truth in Lending Act (“TILA”) and Home Ownership and Equity Protection Act (“HOEPA”). The goals of the amendment are to “protect consumers in the mortgage market from unfair, abusive practices or deceptive lending and servicing practices while preserving responsible lending and sustainable home ownership.” The rule requires a creditor to establish an Escrow Account for homeowner’s insurance, real estate property taxes and other insurance obligations (i.e. flood, private mortgage insurance or PMI) on loans defined by the FRB as ‘higher-priced mortgage loans’. These new rules implemented a mandatory 12 month escrow requirement for liveaboards and full-timers living in RV’s. Most financial institutions service the liveaboards and full-timer RV’s on consumer loan systems, which are not designed to handle the new servicing requirements, and not mortgage loan systems. Thus most financial institutions have elected to cease lending for liveaboards.
I know this answer was probably more in-depth than you were anticipating. Please let us know if we can assist you in the future and thank you for the question.
One thing do you mind if I post your question and the answer so It can help others in the future. I of course will not post any of your person info.
609 254 5573
Sent: Sunday, April 01, 2012 1:08 AM
Subject: RE: Thank you
If I find a boat that is used, what is the age limit to finance and what are the lengths of financing? 5, 10, 15 years?
My initial goal was to buy/finance a larger boat and live on it. Understanding that live aboard situations are not that attractive to lending firms today, my next plan would be to buy a boat that is not exactly live aboard size but comfortable. I work from home (sales) and I thought about splitting my time between my boat and my apartment.
As I mentioned before, I pay $1500 a month for an apt in LA. I would downsize the apt and use the extra money for the boat loan. I currently own a 26′ Chris Craft but its more of a weekender. I am more interested in a 30+ foot trawler or sedan style boat that has more room. I was raised on boats and love the lifestyle. Growing up, we had a 32′ Chris Craft, 33′ Egg Harbor, and a 38′ Californian Trawler.
My situation is as follows:
I work for “”removed name per client””, started there in 2001, I’m base + commission sales, make 6 figures but it bounces from 120K to 150K and during rough times, down to 105K. My credit score/fico is 700+, but my debt to income ratio is high…..I have about 20K in credit card debt.
If the debt to income ratio can be overlooked and the above situation considered, I would be more than interested to take a loan out from your company. My plan would be to have the loan, apt expenses equal what I pay today, which is very realistic.
This might be too much information for you but since you sent me an email and you are the new owner, I thought, “what the hell, it can’t hurt”.
Thank you for taking the time to read my note and I hope you can take my plan into consideration.
Name Removed per client
Date: Sunday, April 1, 2012, 11:08 AM
Thank you for your continued response and we would be more than happy to help you. First, I want to make sure that you understand we are not a lender but a conduit company to many lenders. I have some very strong bankers that work with me and we should definitely be able to help you.
You actually said a very interesting thing in the email below and that is you are planning to keep your apartment. Vessels are definitely designed to spend multiple nights/weeks on them and as long as you keep your apartment as your primary residence then the mandatory 12 month escrow period would not apply. However, as soon as you talk about the vessel as a liveaboard or that you can not prove a different primary residence, then lenders will back away from the loan.
Regarding the age limit and lengths of financing, each lender has their individual criteria but boats less than 10 years old are easier to finance but older vessels are still eligible collateral and the length of loans is typically either 15 or 20 years. In the case of older collateral, the lenders will look more closely at the individual creditor and determine if they have the where-with-all to cover their existing debts and assign a higher vessel maintenance cost when calculating debt ratios.
If we can be of any assistance in helping you find a boat we have relationships with many boat dealers and brokers. Please let me know if you need any additional information and we would be more than happy to help you.
We started this venture because we want to help consumers in their quest to enjoy the pleasures that the marine industry has to offer.
Best of luck in your search for a new boat.
You have been a great help. Thank you for responding. I will continue to boat shop and if I find one that I’d like to finance, I will come to you first. Thanks again for your help and input.
Name Removed per client