Ship Mortgages & Ship Financing

One of the most frequently used tools in securing the repayment of a loan in the shipping industry is a ship mortgage. In practice, a ship owner as the borrower of a loan, will be asked to provide to the lender with this form of security, to obtain the financing they need - most commonly for the purchase of a ship - whereas the lender will acquire an interest on the said ship.

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According to the relevant legislation, any registered (provisionally or permanently) ship in the Registry of Cyprus, may be the subject of security for a loan. The mortgage must be submitted at the Registrar along with the collateral deed of covenants which shall include all of the contractual terms between the lender/mortgagee and the ship owner.

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Upon registration, the date, time and all details pertaining to the mortgage will be submitted as well, and the mortgage will acquire priority regarding all subsequent mortgage registrations.

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Under the Merchant Shipping Laws of 1963 (as amended), the creation of a mortgage on foreign ships which are allowed to fly the Cyprus flag under the registration of a bareboat charter (parallel-in) in Cyprus, is not permitted.

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It is worth noting that under the Stamp Duty Act (19/1963), the mortgage documents are exempted from the stamp duty obligation, a factor which adds up to all the existing benefits of registering a ship under the Cyprus flag.

Our services include drafting and registering a mortgage and deeds of release and general assistance with the ship finance procedure.