First Preferred Mortgage: Why So Many Vessel Owners Prefer It

A First Preferred Mortgage, sometimes called a Preferred Ship Mortgage, is recognized under federal law and carries unique advantages that make it a leading choice among lenders and vessel owners alike. Unlike general liens or private agreements, this mortgage is formally recorded with the United States Coast Guard, giving it priority and enforceability in ways that other arrangements cannot match.

What a First Preferred Mortgage Really Means

A First Preferred Mortgage is a lien recorded against a vessel that has been federally documented. This ensures that the mortgage is not just a private agreement but is instead filed in the official records maintained by the Coast Guard. By doing so, the lender’s interest in the vessel gains federal protection.

As outlined under 46 CFR § 67.1, the rules for recording mortgages are part of a broader system designed to establish clear ownership, financial interests, and obligations tied to documented vessels. This level of recognition is why financial institutions are generally more comfortable lending when this mortgage is in place.

Why Vessel Owners Prefer It

The strength of a First Preferred Mortgage comes from the security it provides. For vessel owners, this can mean:

• Greater access to financing, as lenders are more willing to approve loans secured this way.
• Potentially more favorable loan terms, since lenders see reduced risk.
• A formal, legally enforceable structure that protects both the lender and the borrower.

Many vessel owners prefer it because it allows them to secure the funding they need without relying on less formal or less recognized financial arrangements.

The Importance of Documentation

To qualify for a First Preferred Mortgage, a vessel must first be federally documented. This is because only documented vessels are eligible for this form of recorded mortgage. Without that documentation, the Coast Guard cannot file or enforce the lien.

Our service provides the necessary forms to apply for vessel documentation, making it easier for owners to begin the process. Once documentation is secured, an owner can then apply to record the mortgage.

In addition to initial documentation, maintaining current status is vital. For example, documented vessel renewal ensures that the vessel remains in good standing, which is essential for any active mortgage on file.

What You Need to Apply

Applying for a First Preferred Mortgage involves several key requirements. These include:

• A vessel that has already been properly documented.
• A completed mortgage form submitted to the Coast Guard.
• Identification of the mortgagor (the borrower/owner) and the mortgagee (the lender).
• Specific details about the vessel, such as its official number, name, and measurements.
• The terms of the mortgage, including loan amounts and repayment conditions.

Through our portal, you can access the correct forms needed to record this mortgage with the Coast Guard. While we cannot provide legal advice or determine eligibility, we streamline the filing process by ensuring you have the right applications available.

Comparing a First Preferred Mortgage to Other Options

Not all financing arrangements carry the same protections. A private lien or an informal agreement may bind the parties, but it does not provide the federally recognized priority that a First Preferred Mortgage does. In practice, this difference can matter significantly if disputes arise or if the vessel is subject to competing claims.

Because of its enforceability and priority status, many lenders require this specific form of mortgage before extending significant credit. Vessel owners, in turn, benefit from broader financing opportunities and greater security.

The Role of a Mortgage Lien Release

Once a mortgage is fully paid, the borrower will want to clear the record of that lien. For this, we provide the Coast Guard’s mortgage lien release form. Filing this release ensures that the vessel’s record reflects the debt as satisfied, leaving no active encumbrances tied to the vessel.

This step is just as important as recording the mortgage itself. By filing the release, you preserve the clarity of your vessel’s history and maintain clean records that support future transactions, refinances, or sales.

Our Role in the Process

It is important to note that while we provide the forms and applications to file for documentation, mortgages, and releases, we are not maritime attorneys. We do not evaluate your eligibility for a loan, advise you on whether a mortgage is the right option, or negotiate financial terms. What we do is make the necessary Coast Guard forms accessible through our secure online portal so you can file what you need without delay.

The Connection to Other Documentation Needs

Vessel owners often interact with multiple Coast Guard filings over time. Beyond mortgages, you may need to:

• Renew your documentation regularly to keep your vessel in good standing.
• File transfers of ownership if you sell or purchase a vessel.
• Request a vessel documentation search to confirm key identifying details.

Our portal simplifies all of these processes, allowing you to handle them from one place. For vessel owners who plan to record a mortgage, keeping documentation current and accurate is essential, and our service helps you do just that.

Apply for a First Preferred Mortgage and More Through Our Portal

The popularity of a First Preferred Mortgage is not an accident. It comes down to trust, enforceability, and access to credit. Vessel owners benefit from financing opportunities that may not otherwise be available, while lenders gain security that their investment is protected under federal law. 

It is this balance of interests that has made the First Preferred Mortgage the standard in vessel financing.

If you are ready to move forward with a First Preferred Mortgage, begin by ensuring your vessel is documented. Through our online portal, you can complete the documentation process and access the mortgage filing forms you need. When the mortgage is satisfied, you can also use our site to submit a mortgage lien release.

Explore our secure platform today to see the full range of Coast Guard forms we provide. From mortgages to renewals and beyond, our service makes it straightforward to keep your vessel’s records accurate, complete, and up to date.