'Considerable' demand for yacht financing

Since being the first local bank to launch yacht financing in 2006, HSBC Bank Malta has seen "considerable" demand for the product.

The bank identified an unsatisfied demand in the market, particularly given Malta's location, increasing yacht and boat ownership and improving berth facilities, and yacht finance is more accessible than ever before, Joyce Grech, HSBC head of consumer finance, told The Times Business.

"We have since had considerable demand, ranging from small amounts required to finance small boats to substantial amounts required for large, high value yachts," Ms Grech said.

"We also acted on market developments and developed a product which provides finance to customers who opt to acquire a yacht through finance lease contracts, taking advantage of beneficial fiscal arrangements on yacht leasing. Our yacht lease product, apart from allowing customers to raise finance, also provides them with a complete service - including registration of the leasing company."

Ms Grech explained that customers are able to borrow up to 80 per cent of the cost or value of the boat - whichever is the lower. Loans are to be repaid over a maximum 10-year period or until the customer reaches the retirement age of 65, whichever the earlier.

The product terms stipulate that the minimum to be borrowed must be €59,000 and there is no maximum. One particular advantage is that the loan is secured by a first charge over the yacht acquired and there is no need for additional tangible security, such as a hypothec on the customer's property.

Whether new or previously owned, a professional valuation of the boat by a marine surveyor is normally required. This requirement can be waived if the boat being purchased is of a reputable brand.

The local boating industry estimates that up to 30 per cent of Maltese families could afford to own a boat of some size. But is yacht financing for everyone?

"As with any other borrowing, customers have to make sure that they can afford the repayments, taking into consideration their income and existing commitments," Ms Grech pointed out.

"We assist customers by providing budget planners to calculate their disposable income and ensure that they will not have any problems meeting the monthly loan commitments. The bank will also carry out internal credit assessment procedures based on the customer's particular circumstances to establish the feasibility of the proposed repayment arrangement."

Asked whether Maltese buyers preferred new boats, Ms Grech said the bank had provided finance for both new and previously owned boats but first-time buyers tended to favour the second-hand market. New boats were often the choice for seasoned mariners who were seeking to upgrade.

"It is a very fluid market with no hard and fast rules," Ms Grech emphasised.

HSBC's marketing research shows that agencies, publications and websites had all played a part in the boating market but people seeking to acquire a boat often toured the marinas to see boats up for sale themselves.

"These are usually being brokered by local agents who play a major part in the sector," Ms Grech explained.

"There are also clear indications that events like the Valletta Boat Show are playing an increasing role in promoting the sale of new boats. Many aspiring owners find it very convenient to have several boat models and other items associated with the sector collected in a single showcase, as it makes it so much easier to compare features of the various models."

HSBC Premier is sponsoring the Valletta Boat Show which will be held between today and Tuesday.