Boat Mortgage or House Mortgage?

[Cymrogwyllt]

House first every time. Once it's paid for (repay as much early as you can). Alow for some savings (cheap boat?). Once it's paid for there is money sloshing around to go boating and the housing is free bar taxes and a little maintanance.

For what it's worth This is what I did.

Maxed out on the mortgage (18k) in the '80's on an allegedly restored cottage. Restore was a bodge and the 'leccy was dangerous. About ten years later the heating died despite several attempts at fixes and I bit the bullet and took out another 11k to properly refurb. Value now in 150k range. In the meantime I'd spent 2k odd on kayaks/ trailers etc to keep me on the water. Most expensive kit was paddles. (£200 odd in the '90's for a pair was money well spent for a light carbon/kevlar pair). Made playing in surf for hours much easier.

Get the house and then a boat, maybe not the one of your dreams at first

 

[EuanMcKenzie]

don't know where you live but...

You can still buy a flat for circa £100k (for round numbers) in the north

You could try saving hard to get £10k then buy one and rent it out. Then you're on the ladder even if you don't live in it. That takes some of the risk out

Stay renting you're cheapest room in someone else's house and buy a cheap boat to go sailing in

Then you save a bit more and start climbing the boat property ladder. when you're climbed enough you live aboard if you want to.

If the property ladder works for you are secure and go sailing for longer in you're modest boat.

You don't need a £50k boat - you can't afford to maintain it never mind park it. It will need 10% minimum spent on maintenance for a start

 

[SolentBoat]

Never a borrower nor a lender be. Usury is considered a sin for pretty good reasons.

Live cheaply and save like buggery. Then buy whichever you want. Never be owned by anyone.

 

[Phideaux]

And it will have cost you something like 50k in interest...

I can think of better ways to save for a deposit....

Not sure where you've got your financial figures from, but I've got mine from Lombard sitting here in front of me. £80k loan over 10 years at a monthly repayment of £837 pcm. Total cost of £100,440 over ten years, so £20,440 in interest, or £170 pcm. This equates to something around 2.5% flat or 5% APR.

The alternative is to pay out say £500 pcm in rent for a small flat (except in my part of the world it's closer to £900). So between £60k and £108k given to the landlord and nothing to show for it at the end of ten years. And you still have to save for a deposit.

Everyone appears to be assuming that property prices will recover to their previous growth; well this remarkable rate of growth in property prices was unheard of before the first world war. We've had a 50 year 'blip' in economics driven by two world wars and the desire of banks and borrowers to both make a quick buck and accept the risk. So, the financial chickens have come home to roost and there's been a change in attitude of both borrowers and lenders; money's not so easy to get and borrowers are being more cautious. I can't see recovery for the next five years.

I suspect, at the end of the day, it will come down to whether the OP would be willing to live long-term aboard a 40' yacht.

 

[EuanMcKenzie]

we can't predict the future but it makes sense to me to hedge you're bets both ways

That is all i was trying to say.

If you buy a proper boat in the south surely it costs another mortgage / year to park it unless you're on a cheap half tide mooring

At the end of the day you do the sums and decide but i think you could find a very comfortable live aboard for a lot less than £50k and it would probably depreciate less

 

[Tranona]

Everyone appears to be assuming that property prices will recover to their previous growth; well this remarkable rate of growth in property prices was unheard of before the first world war. We've had a 50 year 'blip' in economics driven by two world wars and the desire of banks and borrowers to both make a quick buck and accept the risk. So, the financial chickens have come home to roost and there's been a change in attitude of both borrowers and lenders; money's not so easy to get and borrowers are being more cautious. I can't see recovery for the next five years.

However, in the long term, population growth as predicted will ensure there is ever increasing demand on housing. So unless supply is increased to meet this demand, prices will rise again - either capital prices or rental.

 

[Babylon]

Chance your arm, but not your whole body

...Everyone appears to be assuming that property prices will recover to their previous growth; well this remarkable rate of growth in property prices was unheard of before the first world war. We've had a 50 year 'blip' in economics driven by two world wars and the desire of banks and borrowers to both make a quick buck and accept the risk. So, the financial chickens have come home to roost and there's been a change in attitude of both borrowers and lenders; money's not so easy to get and borrowers are being more cautious. I can't see recovery for the next five years....

Phideaux, you're spot on!

Eventually the economy and the property market will make a reasonable recovery - it always does - but not terribly fast, and I don't believe we'll ever quite see the same stimulae (technology, wars, social restructuring, etc) and associated macro-economic factors that characterised the second half of the 20th Century. Britain was a fabulously wealthy (if unequal) country before the First World War and even up to the Second, whereafter its been through a radical restructuring of its wealth-base from manufacturing and raw materials (mainly colonies) through to finance, innovation-driven sectors (like design), the service-sector, an experienced and specialised military, and the arts (wot? celebrity culture?!). But there's a limit to how far this can all take us, and I personally believe that we've done our dash.

We're heading into a future where the economic and political shifts are away from Europe and America to China and other Asian countries, which take a much longer view of history, and which brings with it a great deal of long-term cultural and economic uncertainty for us.

So well done my parents' generation (1950s and '60s) and mine (1980s and '90s), but only for just being there at the right time.

How would I advise a youngster (I use the term advisedly, as I'm still sub-50)?

Live your life to the fullest if that is your instinct, or follow a more sedate, financially secure path if that is your nature. Only you know who you are - and if you don't yet, then bloody well get out there and find out!

 

[Phideaux]

Phideaux, you're spot on!

Thanks, I was beginning to think that I was the only one who actually looked at historical trends in macroeconomics and the causes for the post-war boom and how this might be assessed when considering future trends.

I think you're right, all the reasons for our incredible growth are behind us (bit like the Roman and Spanish empires) and the powerhouse for global economics is now vested in the far east. The UK will never again be the industrial nation it once was and our best hope for the future is in the high-tech industries and cutting edge research (if the Government invests), otherwise we're doomed to be a service sector economy and even the financial sector is likely to follow the industrial growth out to the East (the US may be resilient due to their internal demand and capacity for industrial goods and services).

 

[muyuu]

It's not the best moment to buy a house knowing that it's a matter of time until the Bank of England raises the rates (long overdue already, for some reason they're delaying it) and then prices are going to tank hard.

Property prices will "recover" some day I guess, way lower than current prices where they should be at least here in Greater London / South-East.

 

[ProDave]

It's not the best moment to buy a house knowing that it's a matter of time until the Bank of England raises the rates (long overdue already, for some reason they're delaying it) and then prices are going to tank hard.

That's another subject, but raising interest rates will only curb inflation, when the cause of inflation is over borrowing and over spending by over confident consumers.

When (as now) the cause of inflation is outside (worldwide) influences like rising fuel and food prices, and of course raised taxation, then raising interest rates will not stop those things rising, or bring them back down again.

Of course if the economy crashed and we went into a depresion as a result of high interest rates now, then the economy might collapse to the point local goods crahed in price, so offsetting food and fuel. Then inflation might just drop a little, and you could all pat yourselves on the back and say "good, inflation is under control" while you watched unemployment rise, tax revenue fall, and the defecit grow bigger.

Thankfully the BOE can see that raising interest rates now won't "cure" inflation, so they are not.

 

[muyuu]

Thankfully the BOE can see that raising interest rates now won't "cure" inflation, so they are not.

Inflation is not the main problem. The problem is private debt getting completely out of control. "Free money" provokes mass financial suicide and that's where we are going.

As you can verify in many a British forum, people consider "normal" and even "the thing to do" to get into mortgages worth 10 years of one's net salary. With the current economic climate.

 

[ProDave]

Inflation is not the main problem. The problem is private debt getting completely out of control. "Free money" provokes mass financial suicide and that's where we are going.

As you can verify in many a British forum, people consider "normal" and even "the thing to do" to get into mortgages worth 10 years of one's net salary. With the current economic climate.

Actually, at the moment, the trend is for people to pay off personal debt, not add to it. One reason they are not buying houses.

There's no "free money" at the moment. Sadly, 0.5% base rates has not meant cheap deals for borrowers. Try getting a new morgtage now for 2%. You won't. And My bank keep sending me flyers guaranteeing a personal loan at a rate of "only 8%" Well they know where they can stick that rate. But savers only get the bare 0.5%. Then the banks wonder why nobody likes them.

Thankfully some of us have a good memory, and remember how they treated us in "the bad times" and will remember not to give them our custom in the good times.

And I have only ever considered it "normal" to have a mortgage of 3 times salary. In todays market you would be lucky to get that. Perhaps in boom times, some institutions, and some individuals were stupid enough to borrow 10 times sallary, but that was just madness and was not normal.

The more I think about this, the more glad I am that the BOE have control over interest rates. In past circumstances, the chancellor would have raised rates last year, and I'm sure the economy would be worse for it.

 

[z1ppy]

And I have only ever considered it "normal" to have a mortgage of 3 times salary. In todays market you would be lucky to get that. Perhaps in boom times, some institutions, and some individuals were stupid enough to borrow 10 times sallary, but that was just madness and was not normal.

When we bought our current house we went to an IFA and declared everything. mortgage on the boat, mortgage on the flat we also owned (and assumed unable to let) our (joint) salery and expected bonus although not contractual.

I simply couldnt believe what they were prepared to offer us! it was frankly criminal and i am sure that many thousands of people in the same position would have taken it. I dread to think what position we would be in now if we had.

I turn 30 next month and am grateful to be in a relativly fortunate financial position at the moment but acutely aware never to take that for granted. I decided i wanted to buy a HOME and took a risk to achieve that. For the last 7 years i have worked very hard to pay for it and reduce our exposure so i can choose to do something else, and i will work very hard to pay for that also...

 

[muyuu]

Actually, at the moment, the trend is for people to pay off personal debt, not add to it. One reason they are not buying houses.

There's no "free money" at the moment. Sadly, 0.5% base rates has not meant cheap deals for borrowers. Try getting a new morgtage now for 2%. You won't. And My bank keep sending me flyers guaranteeing a personal loan at a rate of "only 8%" Well they know where they can stick that rate. But savers only get the bare 0.5%. Then the banks wonder why nobody likes them.

Thankfully some of us have a good memory, and remember how they treated us in "the bad times" and will remember not to give them our custom in the good times.

And I have only ever considered it "normal" to have a mortgage of 3 times salary. In todays market you would be lucky to get that. Perhaps in boom times, some institutions, and some individuals were stupid enough to borrow 10 times sallary, but that was just madness and was not normal.

The more I think about this, the more glad I am that the BOE have control over interest rates. In past circumstances, the chancellor would have raised rates last year, and I'm sure the economy would be worse for it.

I'm making around 70k (variable included) and I'm in my 30s. Hardly rich, but over average by the looks of it. They tax me like I'm rich though. There is nothing around here for less than 3 times that, which is why there's a long way down for the market to go. Surely up North it's different, but there are no jobs in my sector there. People in the office are buying in cheaper places (now (!?)) and taking 1 hour+ each way to commute deep into chavland, and still paying in the 200k range + interest. Health, future be damned.

It looks that I might getting a good raise and I'd still be pushing it to get "in the ladder" let alone have kids. I guess I'll retire in the med and raise poultry at this rate. And some people think this burden to the population is somehow a good thing because it makes them paper-rich?

 

[Seven Spades]

If you buy a boat for £50K I guess you are looking at 32-36 foot boat and if you keep that in a south coats marina you can kiss good buy to at least £8k on top of your mortgage with an annual lift, mid season scrub, engine service, sinking fund for new sales and all the things that go wrong and they do. I would suggest that that financially you should just do your utmost to buy and pay for a house. Like it or not if you don't buy in your twenties the chances are you will never own a house.

 

[sighmoon]

Hopefully some family members will be willing to help contribute to running costs in exchange for sailing.

Seriously?

If you borrow money to buy a depreciating asset, you'll always be poor.

A boat is freedom. Get a smaller, older one, and save some money so that one day, you can just keep going if the whim takes you.

THere's an assumption on here that house prices always go up in value, and will continue to do so, despite interest rates being at record lows, so only able to move up, despite house prices having outstriped wage inflation for the last 14 years, despite Britain having record levels of public and private debt, despite first time buyers needing massive deposits, and despite the house price to earnings ratio being at a record high. I wouldn't buy a house at the moment either; house prices are not sustainable.

Keep your powder dry.

 

[blueglass]

I have read many posts on here describing the massive problems in getting into the housing market, compared to us old fogies who apparently had it easy. I in no way underestimate the difficulties facing young people today but to suggest we had it easy is rubbish. Let me explain how it was for us.
First of all, to get a mortgage you had to demonstrate to your chosen building society that you were a regular reliable saver over a period of years, not months (with them of course!) You then got an interview and were put on a waiting list if you were deemed suitable. I was a teacher at the time and the 3 x salary formula was not enough to buy a garage in London where I lived. I moved out into the sticks up north and found I could now buy a bigger garage but not enough for a house. My wife was pregnant and about to give up her job also as a teacher, but we lied about that and had her salary taken into account and finally got enough together to buy a 2 bedroomed terraced cottage in Shropshire.
Within months and my wife's salary gone I was now faced with a crippling mortgage to pay out of my own slary. I got a market stall and worked the markets every wekend and holiday to make ends meet as I slowly watched the mortgage interest rate rise to 15%. Yes that's 15% guys - you don't know your born with today's rates.
So did we have it easy - I don't think so!

 

[ska_mna]

Hey bluegrass, sorry didn't want to turn this thread into a young<->old flamewar like so many discussions on this subject. But to come back to you on your point about it not all being roses for "boomers" - totally appreciate that and wouldn't want to imply that the older generation had it easy and sailed through life without working hard.

I think the point here, particularly in the context of freeing up disposable income for an expensive hobby such as sailing, is that while the previous generation could work hard and eventually reap the rewards of paying off mortgages in 40's/50's thereby freeing up cash for boats, retirement etc., the situation now is that the goalposts have shot off into the distance.

So, if you will, this isn't the 30-year-old-me whining that I want a house for nothing and that I don't want to have to work really bloody hard to get there, it's the 50 year old me saying "Hang on, I'm 50 and still have 15 years of mortgage to pay and no pension. S**t."

Consider this:

If you're from an older generation, you perhaps rented for a short while before getting your first mortgage in your 20's, paying that off by the time you were in your 40's/50's. So say, 25 years of paying a mortgage and renting for a short while too. A very rough stab at inflation correction, let's say £450/month for 25 years? That would be £135,000 to get yourself into a position where you're rent and mortgage free by the time you're 45.

If you're from the current FTB'er generation, you will be renting until you're around 38 before buying your first house. So say, 20 years of renting followed by 25 years of mortgage payments, so 45 years. Say at around £700/month x 45 years = £378,000 to get rent and mortgage free by the time you're 65.

That's £243,000 MORE and 20 years later in life.

Doesn't leave much room for expensive hobbies and retirement does it!

Figures by no means accurate, but the order of magnitude will be about right (i.e. totally outrageous!)

Anyway, this isn't your fault, it's the system's fault. Or, if you like, just life. I understand that the 50's/60's renting was the norm anyway, so the rash of homeownership is a relative blip. I guess we're just getting back to that. Which would neatly bring me to my next rant of that, considering FTB'ers rent for 20 years before buying, why the sod is the standard UK tenancy agreement only 6 months to a year!?? That rant is for another day.

 

[E39mad]

Ska mna - the std AST is only for 6 or 12 months mainly due to banks and the uneducated agents - yep everybodies favourite people!!

You can arrange a fixed term one off AST for 3 years less days - afterwhich it needs to be signed off as a deed by a solicitor.

Bank mortgages T&C's mostly state max 12 month tenancies - why is anybody's guess because if a tenant is serious breach of their agreement and stay put the process is no different to evict them.

 

[ricky_s]

So my advice is buy a house as early as you are able to, and to do as I did, pay off the mortgage as quick as you can, by over paying when you can afford it.

Good idea, just don't get married! Otherwise you might just lose it! ;-)