What is a Coast Guard Preferred Mortgage?

preferred mortgage

In the world of vessel ownership, a ‘Preferred Ship Mortgage’ is one the most popular ways to finance the purchase of a boat. This is typically the kind of mortgage that is approved for vessels that measure more than 26 feet in length, as for any boats smaller than that, the title and notation of security interest recorded on the title is usually enough to protect the lender. As one might imagine, the notion of a preferred mortgage can be quite complicated if you aren’t an expert, so keep reading for some guidelines for how this financial arrangement works in general.  

What Does A Mortgage Form Contain?

The most important parts of a mortgage form claim will be the signature of the vessel owners (or made on their behalf), along with the addresses of the mortgagee and mortgagor. Something important to note is that the mortgage needs to cover the entire vessel, not just a specific part of it when it is in a particular location or doing a particular job. The vessel needs to be identified by name, hull number, and official number, and the vessel will not be accepted for a mortgage unless it has a valid certificate of documentation.

Certificate of Documentation

Getting a boat loan isn’t something that you want to wait around for, so it can be a good idea to expedite the process quickly if you can. Something that you can do to make sure that you are always on top of this situation is to choose a renewal advanced payment option to keep the Certificate of Documentation up to date with your mortgage. This option can be used to renew your documentation for up to five years in the future. It gives you peace of mind and is one less thing to worry about regarding your boat ownership experience.

preferred mortgage

Ship Mortgage History

The United States Code preferred mortgage is one that is recorded against a boat that has been documented with the USCG. It dates back to the Ship’s Mortgage Act of 1920, so this process and legislation are more than 100 years old at this point! There is a reason why the word ‘preferred’ is front and center, and that is because they are the first lien preferred in the event that the liens need to be claimed. The only exception to this will be preferred maritime liens.

Put in the simplest terms, a boat is a form of collateral that can be used as security for a mortgage to buy a said boat.  You cannot get a Coast Guard-preferred mortgage unless the boat is fully documented with the Coast Guard. 

In other words, a preferred mortgage gives a banker, financier, or lender of a vessel the detailed status regarding a vessel.

If you want to find out even more information about the details of applying for a Coast guard preferred mortgage, you’ll find the paperwork online at the site along with additional information. For specific questions, contact a member of the experienced team and they will be more than happy to provide the answers that you are looking for. We look forward to being able to help!