Finance your new Lagoon

Marine Mortgage or Marine Lease?

Many of our clients are asking us about the difference between a marine mortgage, as many UK based boats are financed this way, and a French marine lease, which is a popular choice for many boats in Europe.  

Most of us are familiar with the term “marine mortgage”. It is similar to the way that most people raise money against bricks and mortar, in that the purchaser owns the property and the bank secures its interest against the asset in question until the debt is paid. As with most other goods, full VAT applies in the country of delivery.

 Marine Leasing (Leasing with Option to Purchase ), though unavailable for yachts based in the UK, is very popular in many other European countries, especially in France where it has been the purchase method of choice for many years. With a marine lease, the bank holds title to the boat and the purchaser funds an initial deposit plus a number of rental payments over a given period. At the end of the term, the bank offers the boat for sale to the purchaser for a small nominal sum and VAT is added to this residual price.

 The French government, on the assumption that the vessel will spend a certain amount of time offshore, allows a VAT (TVA) reduction on the rental payments, typically 50% at the time of writing. Furthermore, if the yacht is to be kept out of European waters for significant periods of the leasing term (if it cruises between the Western Med from the Western Med to Turkey, for example), VAT on the rental payments will not apply during the time the yacht is outside Europe. This flexibility can be especially attractive to owners of larger catamarans who plan to cruise extensively: they don’t have to pay full VAT upfront, the actual amount of VAT payable is significantly reduced and it does not apply when yacht travels outside a VAT area.

SGB Finance is a subsidiary of Societe Generale, the French Banking giant. They have been lending on boats for the past 30 years. They offer traditional UK Marine Mortgages to UK clients wishing to sail in UK waters and French Leasing which is compliant with French , Spanish , German & Portuguese legislation. Subject to legal country restriction.

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