Bottomry

DEFINITION of 'Bottomry'

When the owner of a ship borrows money and uses the ship itself (referring to the ship's bottom or keel) as collateral. If the ship is lost during the course of the voyage then the creditor will lose on the loan; if the ship survives, the lender will receive the principal plus interest.

BREAKING DOWN 'Bottomry'

The interest received by the lender on a bottomry loan is referred to as "maritime interest", and can be higher than the legal rate of interest. Unlike a typical loan in which the borrower is liable for the debt at all times, a bottomry contract makes the lender liable for the loan because it will not receive money if the ship is lost.

RELATED TERMS
  1. Both-To-Blame Collision Clause

    Part of the Ocean Marine Insurance policy that states that if ...
  2. Assailing Thieves

    Individuals who are not members of a ship's crew who steal a ...
  3. Transloading

    Transferring goods from one mode of transportation to another ...
  4. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  5. The Jones Act

    Legislation that regulates maritime commerce between U.S. cities. ...
  6. International Maritime Organization ...

    A specialized agency of the United Nations that is responsible ...
Related Articles
  1. Personal Finance

    Is Free Shipping Worth It?

    Should you buy more just so you can save on shipping?
  2. Stock Analysis

    The Shape Of Dry Bulk Shipping

    With the global economy recovering, is it time to set sail with shipping companies?
  3. Stock Analysis

    Ship Finance Has The Hatches Battened Down

    Ship Finance will survive, but the risk/reward doesn't look so promising.
  4. Stock Analysis

    SEA Ship-Shape Again

    Claymore's newly re-launched global shipping ETF gives investors an attractive option to play a volatile sector that demands a lot of knowledge.
  5. Budgeting

    7 Tips For Avoiding Shipping Costs When Shopping Online

    Before clicking on that purchase, make sure you're getting the best deal possible.
  6. Stock Analysis

    Is Dry Bulk Shipping All Dried Up?

    Even with a surge in stock prices, dry shipping stocks are still low. Should investors make a value play or stay away?
  7. Stock Analysis

    Looking to Invest in Oil Tankers? Try These 3 Stocks (NAT, SFL)

    Obtain information on the oil shipping industry, and discover three of the most widely traded oil tanker stocks to obtain exposure to oil shipping.
  8. Stock Analysis

    Shipping A Big Mess

    Right now shipping is a market only for the crazy-brave.
  9. Stock Analysis

    Can Tanker Stocks Stay Afloat?

    With fears of a double-dip recession growing stronger, sailing away from the shipping sector might be the best course of action.
  10. Investing News

    Bulk Carrier Vs. Container Vs. Tanker: Exploring the 2016 Shipping Market (C)

    Read about the divergent fates of oil tankers, dry bulk carriers, container ships and other seafaring vessels in the 2016 shipping market.
RELATED FAQS
  1. What is the difference between Cost and Freight (CFR) and Free on Board (FOB)?

    Learn about some international Incoterms, and find out about the difference between free on board shipping and cost and freight ... Read Answer >>
  2. What are the legal regulations on delivery duty paid?

    Understand the legal requirements for delivery duty paid, as well as how responsibilities can shift between buyers and sellers ... Read Answer >>
  3. Does inflation favor lenders or borrowers?

    Find out under what circumstances inflation benefits borrowers more than lenders and in which situations inflation can be ... Read Answer >>
  4. What is PMI, and does everyone need to pay it?

    Also known as "Primary Mortgage Insurance," PMI is the lenders (banks) protection in the event that you default on your primary ... Read Answer >>
  5. What are the pros and cons of life insurance policy loans?

    Find out the pros and cons of borrowing against your life insurance policy to help you decide if this loan type is the right ... Read Answer >>
  6. How can I use the correlation coefficient to predict returns in the stock market?

    Read about simple interest loans, how they function, and some of the loan products or contracts that are most likely to carry ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center