Glossary
Mortgage (Vessel)
Definition: A vessel mortgage is a security interest registered over a yacht in favour of a financing partner (bank or fund), under the law of the flag state. The owner keeps ownership; the mortgage is discharged when the debt closes.
Why it matters
The mortgage is the building block of yacht financing. It reduces the financing partner's recovery risk. In practice, yacht financing without a mortgage is not feasible.
Types
- 1st-ranking (priority) — paid first on default
- 2nd-ranking — paid after 1st-ranking is fully covered
- Multiple mortgages on the same vessel are possible, by rank
Which law applies?
The flag state's law. Turkish flag → Turkish Commercial Code; Marshall Islands → MI Maritime Act; Malta → Malta Merchant Shipping Act, etc.