Preferred Ship Mortgage

A Preferred Ship Mortgage is a special type of loan used to finance the purchase of a commercial vessel, such as a cargo ship. It allows the lender to have a legal claim on the ship as collateral. This means if the borrower fails to repay the loan, the lender can take possession of the ship to recover their investment. This type of mortgage is regulated by maritime law and provides priority over other claims, ensuring that creditors have a better chance of being paid if the ship is sold to settle debts.