Boat Mortgage or House Mortgage?

[sailingmonkey]

I'm in my late twenties and am starting to earn enough money to think about long-term finances. I'm currently renting and whilst I'd like to save for a deposit for a house, I'm more interested in buying a boat.

Right now I'm thinking that I'd like to save up over the next two years to put down enough of a deposit to get a mortgage on a boat for, say, £50,000 over 15 years and carry on renting. Hopefully some family members will be willing to help contribute to running costs in exchange for sailing.

This does mean renting for the next 15 years, and assuming I then decided to try and buy a house, I'd be in my mid forties before getting on the property ladder.

Have other people foregone houses in order to buy boats? Frankly the cost and hassle of owning a house just doesn't appeal to me, but I am conscious that spending £600 a month renting is money down the drain. With 90% mortgages though, I'm going to be saving for a long time before I can afford anything decent, missing out on a lot of decent sailing in the meantime. I don't want kids and so don't need to consider family costs.

Thoughts? Advice?

 

[RichardS]

How about spending a few hundred on a sailing dinghy and joining a local club whilst you get the housing sorted out?

That should give you your weekly sailing fix and it's also great experience when it does come to sailing a bigger boat later.

This is what I, and probably many of us on here, did (and most of us came through unscathed . )

Richard

 

[Phideaux]

Buy a boat big enough to live on

 

[Georgio]

A good friend of mine (who is also on this forum) bought a boat to live on rather than a house, he seems very happy with the decision. Hopefully he will see this and comment.

While living on a boat is very different to using one for weekends and holidays it does make a lot of sense and also gives flexibility. It won't appreciate in value like a house but if you get an older boat and look after it you shouldn't lose money on it either. The only issue is getting a boat mortgage on an older boat is not as easy as it was pre-recession.

Final thought - it's far easier to change the view from a bedroom window if you live on-board.

 

[Vid]

Why spend £50k on a boat, with all associated running costs? There's lots of great little older yachts out there for £5k that will cost a fraction of a newer/larger boat to run and give you plenty of action - then you could have both, affordably. PBO have been running a terrific series recently on boats around 30 years old and costing from £3k-£10k and there have been some stunning bargains on internet auction sites recently (perfectly good boats going for eay under what they should fetch).

I did this and am pleased to get a really good balance in life.

 

[ProDave]

Renting a house is money down the drain. Well actually no, it's money into someone elses retirement fund (I know I have two properties we rent out )

On the other hand, paying a mortgage is an investment for the future. I'm not yet 50, but I own my house outright. No rent for me ever.

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.

In the mean time, you can as other have said, buy a perfectly sailable boat for less than £5k so you can go sailing and be a home owner.

In your late twenties, you should be able to have the house bought and paid for outright by the time you are 50. Plenty of time then for a bigger more expensive boat if you so choose.

Of course not everyone will agree with my financial outlook. I have spent most of my life driving cheap old cars, rather than a posh new one. That has enabled me to spend a greater proportion of my income paying off the mortgage quickly. Now still in my 40's I am reaping the benefit of that. I am self employed now, and because I have no mortgage, I only need to work part time. More time to spend enjoying myself.

If you chose the rental option, you would still be paying rent when you retire, worrying if your pension would be big enough to pay the rent, or working longer until it was big enough for you to retire.

 

[planteater]

I concur with the Vid and Dave. £5k boat and a place of your own. While property isn't the surefire moneyspinner it used to be, prices only have to rise slightly to be completely unaffordable in the current economy.

 

[sailingmonkey]

Some good advice, thanks. I'll need to give it some serious thought I guess.

My feelings are, that I could spend 5k on a boat, but one which will need more work to maintain than I have the skill or patience for, since a boat built in the 70s will inevitably need things replacing more rapidly than one built in the early 2000s. I'd certainly have more confidence sailing a newer boat around the UK than one from the 70s that I'd bought for 5k.

I accept the point that paying a house mortgage off quickly would give me more time later to be buying boats, but I'm a little scared of "living for tomorrow" since tomorrow may never come. That's probably a little naive; but retirement does seem an awfully long way away (forty years, since I most likely won't be able to retire until I'm 68).

 

[cliffdale]

I think you need to sort out the priorities out now. late 20s means approaching 30 and you do not own a home?

My advice to you is to get into the housing market now and go with the other suggestions why 50k k when you can have same fun for 5k.

Without doubt, own your house first and take the plunge. If you have family / wife look after them first. Renting is lost money for you.

I was in a similar position to you a few years ago and i am so pleased that I bought a house and not a boat!!!!!!!!!!!

One year after buying my house, I made a daft offer on a boat and the seller agreed!


So now, I have a lovely house and am shopping around for about my 10 boat to buy.

NO DOUBT IN MY MIND BUY YOUR HOUSE AND LET THE BOAT FOLLOW!

look after the family

 

[Baggywrinkle]

My vote is for house + cheap boat.

By buying a 50k boat you will be paying rent twice unless you live aboard. Once for your rental house, and once for the marina berth/mooring + the other stuff (lift out, antifouling, broken bits etc.)

I'd buy a house and a cheap boat - if it must be a yacht then make it a trailer sailer to save on running costs.

As you age (sounds horrible but it happens to everyone) your morgage becomes less and less of your monthly income and inflation erodes the effective amount of the loan as do your repayments. A house is also more likely to appreciate than depreciate like a boat. (taking inflation into account, all boats depreciate.)

Once you've got your house sorted and are feeling flush, then go buy a big boat with all the associated costs. A couple of paid-off houses can be a great way to fund a good few years circumnavigating or bumming around in the med.

Rent on the other hand will certainly keep pace with inflation (I also have rental houses), and will therefore always rise to what the market can bear - FOREVER!!!

 

[Vid]

My feelings are, that I could spend 5k on a boat, but one which will need more work to maintain than I have the skill or patience for, since a boat built in the 70s will inevitably need things replacing more rapidly than one built in the early 2000s.

Not so, if you buy carefully - there's lots of well-maintained older boats out there which won't require anymore work necessarily than a more recent one. There's a lot of very seaworthy designs to pick from but you'll have to forego some of the modern conveniences, though not many in reality.

 

[Lady Campanula]

Is it boat ownership, or sailing, that you want?

 

[nrbx]

I would at least try and get a boat, I took the plunge 2 years ago and scraped everything together for my first boat.

I loved it so much it drove me to keep earning more for the next upgrade, and it paid off really well.

Having something you love to work towards is invaluable.

 

[penfold]

Is it boat ownership, or sailing, that you want?

sailing other people's boats is much, much cheaper!

 

[Deleted member 36384]

Time Is Everything

..... I accept the point that paying a house mortgage off quickly would give me more time later to be buying boats, but I'm a little scared of "living for tomorrow" since tomorrow may never come. That's probably a little naive; but retirement does seem an awfully long way away (forty years, since I most likely won't be able to retire until I'm 68).

I am 46 in June. Mentally I am probably late 20s. Where the hell did 25 years go? The more you do, the faster the time passes.

Buy a flat / house and buy a low cost boat, both will develop over the next 25 years.

"Since tomorrow may never come" attitude is not naive, it is plain stupid. Statistically you will live to be an old man, that is a fact and it doesn't sound like you are GI fighting in Vietnam, maybe in a dumb ass virtual X-box world.

So get a grip on reality if your plans are to live in a Western style economy. Your economic position when you retire is highly dependent on time for money to grow and right now you have time.

Use these guys www.h-l.co.uk to max out a stock ISA every year and you will be laughing come retirement.

My background: I never had any assets until I was 25 and had been sailing full time for years. Bought a small flat. At 35 I realised that there was no money in the pot for retirement and I could not save, but I was on my 3rd house. Went up to Aberdeen and whored for the oil industry. It has taken every ounce of money I have earned to secure a retirement and reduce all debt. I am now on my 5th house and at 43 bought my yacht (house mortgage zero, marine mortgage small).

My experience is that it is very easy to run out of time to save. Get rid of debt, increase your disposable income anduse any disposable income to generate wealth. The arithmetic is easy 5% growth on £1000 or 5% growth on £100,000. If at all possible look after your own retirement needs and cut out all middlemen, they suck the life out of savings. Its not hard to do. Workout how much money needs to be in place to generate an annual income that you would be happy to live on from say 55 or 60 years of age. Next plan how you will get that income by that date. A mix of house value balance by down sizing, cash, stocks and any pension schemes. Then set about doing it. What I have just stated is simplistic but once you start looking at it and crunching some numbers, you soon see that, its not a hard concept and it is quite easy. The Hargreeves and Lansdown web site will help.

Remember, statistically you will live long and and time is needed to make money grow. A lot of people have problems understanding this. I also chased the dollar, which is probably more important.

Then again, get a boat and live on it, your world my change for the best for the rest of your life, there is only one way to find out and time is everything.

Good luck.

 

[sailingmonkey]

Thanks for all the advice.

I think the determination to be out on the water as much as possible makes it easy to forget about other things. I am paying into a pretty good (currently final salary) pension, so I do have some retirement plans already.

I'm looking at cheaper boats and thinking about how I can get on the property ladder at the same time. Saving for a deposit is going to take time, so people are right in saying that I need to get on it asap.

Maybe I should buy a boat and live on it; I'd probably be far happier!

 

[Scotty_Tradewind]

I concur with the Vid and Dave. £5k boat and a place of your own. While property isn't the surefire moneyspinner it used to be, prices only have to rise slightly to be completely unaffordable in the current economy.

Ditto.

Very rare to hear of people buying a boat to live on and selling later for an overall profit.

I've made a reasonable amount on two properties over the years, having improved both of them substantially and my wife and I have now downsized nearing retirement and rent out a flat.

no matter how much you'r putting away now it will always be a fraction of what you'd hope for when it matures and you retire.

 

[bbg]

My boat will be available for sale in 8 months, if all goes according to plan. £50,000 would buy her, so I suggest you go for that option.

But if it were me I'd get on the property ladder sooner rather than later, and settle for a smaller boat for now. In ten years you will both (1) be well established on the property ladder and (2) be able to afford a bigger boat. In fact you might already be on your third boat by then.

 

[photodog]

Dont be a idiot. Buy a house and then when you get that sorted get a boat.


Honestly... you will never regret buying a house. But you sure as hell will have regrets over a boat when you are 45 and you still are putting good money into other people pockets for the roof over your head.

Mortgages now are the cheapest you will ever see in your life. DONT MISS OUT!

If you leave it in 10 years time mortgage rates will be higher, and houses more expensive... and you will have pissed away thousands on a hole in the water.

OTOH in 10 years time you wil have good equity and a roof over your head and be well on your way to having some equity... Then you will be able to afford a boat and be comfortable with it.

 

[E39mad]

Simply (very) put historically property has been most peoples best ever investment and yachts haven't.

Not saying that property is going to be a surefire investment over the next few years but over a couple of decades it almost certainly will be.

I am 43 this month and am lucky enough to have paid off the main house mortgage (bought ten years ago) and have 3 other properties which I rent out. I have pensions too but don't trust them as much as controlling my own destiny!!