Need To Understand A US Coast Guard Preferred Ship Mortgage? Read On!

If you’re reading this article, it’s probably because you want to know more about a US Coast Guard preferred ship mortgage. If you’re new to the maritime industry, in any capacity, there’s a lot of jargon that you may be unfamiliar with. As a responsible boat owner, it’s up to you to learn the language of the seas so that you can adhere to rules and regulations and keep your documentation in order. Preferred ship mortgage comes up in questions a lot and this guide will tell you all the most pertinent facts.

What is a US Coast Guard Preferred Ship Mortgage? 

The basic definition of this is that it’s a mortgage that has been applied against a vessel. More specifically, it’s applied to a vessel that is registered with the United States Coast Guard. The designation of “preferred” means that the mortgage takes precedence over all other maritime liens that the boat may accrue. That means that the mortgage lender must be paid before anyone else, including mechanics, crew or salvage. 

Where Did the Mortgage Come From?

This mortgage goes all the way back to the early 20th century when the Ship’s Mortgage Act of 1920 was implemented. It was part of the development of the American Merchant Marine and was part of an effort to get people to invest in boats at a time when many were watching their money. Now, it’s evolved into a way that buyers can secure financing to buy a vessel. 

What Forms are Involved?

While there is no specific form that is required for a preferred ship mortgage, it’s still imperative to keep your boat documentation in order. These pieces of paper (whether physical or digital) contain all of the relevant information necessary to identify your boat, meet legal requirements and ensure that you are compliant with safety and operation guidelines. Failure to have current and accurate documentation can result in fines and penalties, so it’s best to keep it all in one easy to access place. That includes any and all documents that pertain to your mortgage. 

Importance of Accurate Documentation

Your boat documentation will need to be up to date to secure a loan for it. Most lenders won’t enter into a financial agreement with you if your paperwork is expired, inaccurate or incomplete. That’s why it’s important to be sure everything is filled out correctly and ready to go when you apply for a ship mortgage. This can be a bit overwhelming and time consuming, but we can help. Having a professional on your side can make the process much faster and easier, so don’t be afraid to ask for assistance if you need it. 

If you need help understanding a US Coast Guard preferred ship mortgage and how it applies to you and your vessel, you’re in the right place. The Commercial Fisheries Permit Center can walk you through the steps and answer your questions along the way. Contact us today to get started.