Sell a home, buy a boat - does it stack up?
Discussion
Hi,
I'm currently considering selling my home and using the equity to buy a narrowboat outright to live on full time. I rented and stayed on a boat for a week to try it out in November and really enjoyed it, so there's no worries there. I know this is only a small snapshot of time and there's the novelty factor but deliberately chose the coldest, bleakest time to try it out.
I'm in my early 30s, in decent employment, no debts other than a mortgage and I don't have any children. There's a good few reasons for wanting to make a change. I live on a new build estate - whilst it serves its purpose in terms of being safe, secure and low maintenance, it's generally quite a dull, soulless place. This is why boating appeals. There appears to be a really decent sense of community. My home's very small and minimalist - I'm not one for clutter - so I can't see there being too much of a problem with transitioning in terms of space.
I'd like to permanently moor in Cheshire and already live very close to:
Midway Boats/Barbridge,
Audlem Overwater Marina
Swanley Bridge
Nantwich Venetian Marina
I know some don't offer residential moorings but I've read a fair bit about blind eyes turned etc..
Lastly, and I understand completely why it shouldn't be the prime reason for wanting a change, is it'd allow me to become and live 100% debt and mortgage free. If I were to sell my property, once all the fees and charges are paid, I'd be left with around £50-55K to buy a boat outright. By the looks of it, I could get something around 55ft in decent condition that'd be suitable to live aboard on.
I've been trying to weigh up the pro's and cons financially of doing this and have looked both short terms and long-term/10 years from now. The running cost of the boat appear to be realistic from the research done.
In summary, it appears not to make financial sense to do this based on the below figures.
I'd calculated over 10 years because if I made overpayments in line with the amount shown during this time I'd own my home 10 years from now.
The below suggests that whilst I'd potentially save £58K over 10 years through living on a boat, it'd only be worth perhaps 38K in 10 years time, so I'd only have liquid/fixed assets worth £96K in 10 years assuming zero growth or return on the money I saved through doing this.
Whereas with the house, if it were to be worth £150K in 10 years - it's currently valued around £140K - then I'd have assets worth £55K more than going down the boat route. And after 10 years, I'd own the house and then have an extra £750 a month as there'd be no mortgage/overpayment calculator.
What comes to mind re. the point above is that whilst I'd own the house I'd be asset rich and cash poor. So what's the point? I could maybe understand if the house could be sold to later downsize and then use what's leftover but it's not really possible to get a house too much smaller! On the other hand, with the £750 a month saved, it'd take almost 6 years to save the £55K I'd have done by living on the boat - then I'd have the best of both worlds.
Apologies for the level of detail. I've just tried to work things out in honest and realistic terms. I'd be really keen on your thoughts and feedback on anything on the above, and what you'd do in my shoes and why...
Thanks,
I'm currently considering selling my home and using the equity to buy a narrowboat outright to live on full time. I rented and stayed on a boat for a week to try it out in November and really enjoyed it, so there's no worries there. I know this is only a small snapshot of time and there's the novelty factor but deliberately chose the coldest, bleakest time to try it out.
I'm in my early 30s, in decent employment, no debts other than a mortgage and I don't have any children. There's a good few reasons for wanting to make a change. I live on a new build estate - whilst it serves its purpose in terms of being safe, secure and low maintenance, it's generally quite a dull, soulless place. This is why boating appeals. There appears to be a really decent sense of community. My home's very small and minimalist - I'm not one for clutter - so I can't see there being too much of a problem with transitioning in terms of space.
I'd like to permanently moor in Cheshire and already live very close to:
Midway Boats/Barbridge,
Audlem Overwater Marina
Swanley Bridge
Nantwich Venetian Marina
I know some don't offer residential moorings but I've read a fair bit about blind eyes turned etc..
Lastly, and I understand completely why it shouldn't be the prime reason for wanting a change, is it'd allow me to become and live 100% debt and mortgage free. If I were to sell my property, once all the fees and charges are paid, I'd be left with around £50-55K to buy a boat outright. By the looks of it, I could get something around 55ft in decent condition that'd be suitable to live aboard on.
I've been trying to weigh up the pro's and cons financially of doing this and have looked both short terms and long-term/10 years from now. The running cost of the boat appear to be realistic from the research done.
In summary, it appears not to make financial sense to do this based on the below figures.
I'd calculated over 10 years because if I made overpayments in line with the amount shown during this time I'd own my home 10 years from now.
The below suggests that whilst I'd potentially save £58K over 10 years through living on a boat, it'd only be worth perhaps 38K in 10 years time, so I'd only have liquid/fixed assets worth £96K in 10 years assuming zero growth or return on the money I saved through doing this.
Whereas with the house, if it were to be worth £150K in 10 years - it's currently valued around £140K - then I'd have assets worth £55K more than going down the boat route. And after 10 years, I'd own the house and then have an extra £750 a month as there'd be no mortgage/overpayment calculator.
What comes to mind re. the point above is that whilst I'd own the house I'd be asset rich and cash poor. So what's the point? I could maybe understand if the house could be sold to later downsize and then use what's leftover but it's not really possible to get a house too much smaller! On the other hand, with the £750 a month saved, it'd take almost 6 years to save the £55K I'd have done by living on the boat - then I'd have the best of both worlds.
Apologies for the level of detail. I've just tried to work things out in honest and realistic terms. I'd be really keen on your thoughts and feedback on anything on the above, and what you'd do in my shoes and why...
Thanks,
TvrJohn said:
Interesting read of your reasons and financial assessment, obviously you have the urge, why not just try it for a couple of years and see how your lifestyle changes. You can always sell the boat and get back in the property market / rat race .
Thanks.I guess I live fairly frugally and avoid getting myself weighed down with contracts and commitments, i.e. no Sky TV or super fast broadband etc. It's not as though I'm sat here wishing I had them but being too tight to pay for them, it's just that I'm not too bothered about having them and feel the financial benefit from not doing so.
I could do it, you're right, but what's scary is coming off the property ladder and it only ever becoming harder and harder as the years go on to rejoin, to the extent it might not be possible!
Living on a boat in California, where it's sunny and dry, is fine.
Living on a boat in Britain, where it's rainy and damp every day, is not good for your longterm health.
Leaks, damp, mould, wind, spray, dirty water... once the novelty wears off in a year or two, it'll be miserable.
Stick with bricks and mortar.
Living on a boat in Britain, where it's rainy and damp every day, is not good for your longterm health.
Leaks, damp, mould, wind, spray, dirty water... once the novelty wears off in a year or two, it'll be miserable.
Stick with bricks and mortar.
Could you afford to buy a boat and let your house out?
I have family that live on a house-boat in London. They love it, like the strong sense of community, and make the point that it's a comparatively cheap way of living. However, exactly as you point out, you risk losing-out on property appreciation. If you can keep your house you might be able to get the best of both worlds.
I have family that live on a house-boat in London. They love it, like the strong sense of community, and make the point that it's a comparatively cheap way of living. However, exactly as you point out, you risk losing-out on property appreciation. If you can keep your house you might be able to get the best of both worlds.
There's definitely downsides to living on a boat. From everything I've read and had feedback from owners, the winters are perfectly warm and there's no damp so long as you've a decent boat with the right foam insulation. Most have central heating, radiators and a wood/coal burner.
I couldn't afford to buy a boat and rent my home out, unless I were to somehow remortgage my home, take the full equity out and start again.
I couldn't afford to buy a boat and rent my home out, unless I were to somehow remortgage my home, take the full equity out and start again.
I've researched most types of alternative living, from narrowboats to motorhomes. Although I consider myself relatively hardy and low-maintenance, having lived in a space no larger than the largest Sprinter van for 13 months, I concluded that I'd struggle to live in a small confined space for a significant period of time, I also need space to grow food, energy generation and for vehicular maintenance, building and repair, so they were out. I'm currently seeking a minimum of 5 acres of green belt to dwell on, off-grid style. Intentions are to harvest rain water, utilise solar / wind / water power and the land must comprise woodland for coppicing purposes. Negating the question of house vs 'alternative house' cost effectiveness, I'd need to answer the question, 'would I be happy with such a living arrangements long-term'? That'd be the main question for me.
I've lived aboard my narrowboat for 6 years now. I'm not sure I'd want to live in a marina though. May as well be in a flat imo, I would be bored rigid.
November is quite nice weather. The hard time on a boat is now. From Christmas until March time. It seems to last forever. It's just relentless cold, damp, dull and dreary. And for a cruiser like me, muddy. The towpaths are disgusting at the moment. I've always hated cold and wet weather and living on a boat makes it worse!
Come spring it will all be a distant memory as the canals come alive again
November is quite nice weather. The hard time on a boat is now. From Christmas until March time. It seems to last forever. It's just relentless cold, damp, dull and dreary. And for a cruiser like me, muddy. The towpaths are disgusting at the moment. I've always hated cold and wet weather and living on a boat makes it worse!
Come spring it will all be a distant memory as the canals come alive again
Edited by 2thumbs on Sunday 4th February 00:23
2thumbs said:
I've lived aboard my narrowboat for 6 years now. I'm not sure I'd want to live in a marina though. May as well be in a flat imo, I would be bored rigid.
I'd looked at a marina because of the practicalities - I need somewhere to park and I'd prefer somewhere secure too. Others have suggested an online mooring which might have car parking.Either way, I'd need somewhere prepared to overlook the fact I'd be living there rather than just a few days/weeks a year.
Out of interest, do my running costs look realistic?
I think you need to take in to account the investment of your savings and not assume a static (or in effect) shrinking value in terms of inflation. Otherwise your comparison of savings with a house value in 10 years is floored. For example I am getting 7.9% after fees and bad debt for crowdsourcing loans at the moment which is outperforming most of the uk housing market.
Of cource the balance between bonds, shares and bricks changes but there is usually only 1 or 2 % between them over the long term. We are so obsessed with bricks in this country it is often ovelooked. The key advantage bricks have over the others is the tax free gain. This would change if Corbin got in though. Bonds and shares can also be wrapped up in pensions etc meaning you are not taxed on this either (IANAFA).
http://www.thisismoney.co.uk/money/investing/artic...
Of cource the balance between bonds, shares and bricks changes but there is usually only 1 or 2 % between them over the long term. We are so obsessed with bricks in this country it is often ovelooked. The key advantage bricks have over the others is the tax free gain. This would change if Corbin got in though. Bonds and shares can also be wrapped up in pensions etc meaning you are not taxed on this either (IANAFA).
http://www.thisismoney.co.uk/money/investing/artic...
Thurbs said:
I think you need to take in to account the investment of your savings and not assume a static (or in effect) shrinking value in terms of inflation. Otherwise your comparison of savings with a house value in 10 years is floored. For example I am getting 7.9% after fees and bad debt for crowdsourcing loans at the moment which is outperforming most of the uk housing market.
Of cource the balance between bonds, shares and bricks changes but there is usually only 1 or 2 % between them over the long term. We are so obsessed with bricks in this country it is often ovelooked. The key advantage bricks have over the others is the tax free gain. This would change if Corbin got in though. Bonds and shares can also be wrapped up in pensions etc meaning you are not taxed on this either (IANAFA).
http://www.thisismoney.co.uk/money/investing/artic...
Thanks,Of cource the balance between bonds, shares and bricks changes but there is usually only 1 or 2 % between them over the long term. We are so obsessed with bricks in this country it is often ovelooked. The key advantage bricks have over the others is the tax free gain. This would change if Corbin got in though. Bonds and shares can also be wrapped up in pensions etc meaning you are not taxed on this either (IANAFA).
http://www.thisismoney.co.uk/money/investing/artic...
I've got a LISA a few weeks ago and there's £1700 in there. It's split over 3 funds - HL own, Lindsell Train and FP Crux - and I'm down 2% overall with one funding having dipped 5%!
I'm obviously crap at picking them. I wanted to use a static number, which is in effect a loss, to see the worst case scenario.
I could probably use 1.5% as a safe figure if it were just in a non stock and shares ISA/savings account, but on £60K (£476 a month for 10 years) even with compound interest only gives me £5K interest.
You won't have a problem finding and living full time in a marina leisure berth, they generally allow it and turn a blind eye.
Some do have official residential moorings but these are subject to council tax.
Your costings seem pretty good to me, if anything you could bring most of the figures down a bit. You won't be spending that much on batteries. Especially if you spend most of your time hooked up.
Our boat insurance is 150 a year including public liability, (we trade from the boat).
I doubt you'll spend anywhere near that on anodes either, I think we paid 40 quid each fitted last time and they should last a good five years, unless you have electrical problems!
If you are hooked up you won't be running the engine much so hardly any diesel cost.
TV licence? Come on!
I think you will be pleasantly surprised with your costings.
Some do have official residential moorings but these are subject to council tax.
Your costings seem pretty good to me, if anything you could bring most of the figures down a bit. You won't be spending that much on batteries. Especially if you spend most of your time hooked up.
Our boat insurance is 150 a year including public liability, (we trade from the boat).
I doubt you'll spend anywhere near that on anodes either, I think we paid 40 quid each fitted last time and they should last a good five years, unless you have electrical problems!
If you are hooked up you won't be running the engine much so hardly any diesel cost.
TV licence? Come on!
I think you will be pleasantly surprised with your costings.
Edited by 2thumbs on Sunday 4th February 00:52
2thumbs said:
You won't have a problem finding and living full time in a marina leisure berth, they generally allow it and turn a blind eye.
Some do have official residential moorings but these are subject to council tax.
Your costings seem pretty good to me, if anything you could bring most of the figures down a bit. You won't be spending that much on batteries. Especially if you spend most of your time hooked up.
Our boat insurance is 150 a year including public liability, (we trade from the boat).
I doubt you'll spend anywhere near that on anodes either, I think we paid 40 quid each fitted last time and they should last a good five years, unless you have electrical problems!
If you are hooked up you won't be running the engine much so hardly any diesel cost.
I think you will be pleasantly surprised with your costings.
Brilliant, thanks.Some do have official residential moorings but these are subject to council tax.
Your costings seem pretty good to me, if anything you could bring most of the figures down a bit. You won't be spending that much on batteries. Especially if you spend most of your time hooked up.
Our boat insurance is 150 a year including public liability, (we trade from the boat).
I doubt you'll spend anywhere near that on anodes either, I think we paid 40 quid each fitted last time and they should last a good five years, unless you have electrical problems!
If you are hooked up you won't be running the engine much so hardly any diesel cost.
I think you will be pleasantly surprised with your costings.
Edited by 2thumbs on Sunday 4th February 00:51
I'd just read about all the horror stories with stuff constantly needing fixing and going wrong, so wanted the worst case scenario. And I thought I'd overstated the diesel too.
Do you reckon there'll be much of an issue in 20+ years with availability and cost given what's happening with diesel cars?
thenortherner said:
Brilliant, thanks.
I'd just read about all the horror stories with stuff constantly needing fixing and going wrong, so wanted the worst case scenario. And I thought I'd overstated the diesel too.
Do you reckon there'll be much of an issue in 20+ years with availability and cost given what's happening with diesel cars?
It is a very cheap way of life. I believe electric at marinas is generally peanuts too, I doubt you would use half that.I'd just read about all the horror stories with stuff constantly needing fixing and going wrong, so wanted the worst case scenario. And I thought I'd overstated the diesel too.
Do you reckon there'll be much of an issue in 20+ years with availability and cost given what's happening with diesel cars?
I've no idea how the diesel issue will affect boats. We normally get ignored by any government legislation as there's not enough of us to be concerned about. And we all run on red anyway. Only time will tell I guess but cars are only one area of diesel use, so supply shouldn't be an issue for a long time yet.
I have seen online two narrowboats being built recently that are having hybrid marine engines fitted though, so obviously some people are thinking about it!
Slightly different way of looking at this, splitting it into unavoidable living costs and investment income.
Start with unavoidable living costs: If you set aside the mortgage overpayment (which is discretionary) you have £7392 pa of costs for the house and £6180 pa for the boat. The house generates £1k pa of capital growth by your reckoning, the boat loses £1.7k. So the house is costing you £6392k pa, the boat £7880. So the boat is costlier by £1488 pa on a day to day living basis during the 10 years.
Now turn to investment income, what you do with the £45k you can save. You reckon you have max £55k of equity now (after sale costs), so if you still own your home in 10 years you’ve turned your £45k into £140-55 = £85k (excluding the capital growth counted earlier, as you get it if you overpay or not). Whereas saving it and investing it at even 3% net return (which is high) you’d get £58k.
The surprisingly big difference of £27k here is caused by the nature of your repayment mortgage. It isn’t really ‘cost’. It is increasingly paying back capital as well as reducing interest payments. Your regular mortgage payments (not overpayments) are therefore also contributing (140-82-45)= £13k of Capital repayment over the period.
So by my reckoning, by buying a boat instead of staying in your house, you are not just losing £1488 a year, you’re losing £1488+£2700=£4188 pa. Over 10 years that is £41,880. Or put another way, if you stay in your house for 10 years you’d have saved enough to buy the same boat off the guy who bought it instead of you 10 years ago. And then you’d have both.
That said, that’s the rationale view. You could shuffle off this mortal coil in the next 10 years and never get there. In which case, if living on a boat is a dream for you, go and do it and hang the cost. ‘YOLO’ as the kids say.
Few caveats... This assumes interest rates don’t go up, which may not be the case. On the other hand, also assumes quite modest capital growth on your house (<1% pa). And please note I am not providing advice, just my opinions, and would recommend you go to a qualified advisor if you need help.
Start with unavoidable living costs: If you set aside the mortgage overpayment (which is discretionary) you have £7392 pa of costs for the house and £6180 pa for the boat. The house generates £1k pa of capital growth by your reckoning, the boat loses £1.7k. So the house is costing you £6392k pa, the boat £7880. So the boat is costlier by £1488 pa on a day to day living basis during the 10 years.
Now turn to investment income, what you do with the £45k you can save. You reckon you have max £55k of equity now (after sale costs), so if you still own your home in 10 years you’ve turned your £45k into £140-55 = £85k (excluding the capital growth counted earlier, as you get it if you overpay or not). Whereas saving it and investing it at even 3% net return (which is high) you’d get £58k.
The surprisingly big difference of £27k here is caused by the nature of your repayment mortgage. It isn’t really ‘cost’. It is increasingly paying back capital as well as reducing interest payments. Your regular mortgage payments (not overpayments) are therefore also contributing (140-82-45)= £13k of Capital repayment over the period.
So by my reckoning, by buying a boat instead of staying in your house, you are not just losing £1488 a year, you’re losing £1488+£2700=£4188 pa. Over 10 years that is £41,880. Or put another way, if you stay in your house for 10 years you’d have saved enough to buy the same boat off the guy who bought it instead of you 10 years ago. And then you’d have both.
That said, that’s the rationale view. You could shuffle off this mortal coil in the next 10 years and never get there. In which case, if living on a boat is a dream for you, go and do it and hang the cost. ‘YOLO’ as the kids say.
Few caveats... This assumes interest rates don’t go up, which may not be the case. On the other hand, also assumes quite modest capital growth on your house (<1% pa). And please note I am not providing advice, just my opinions, and would recommend you go to a qualified advisor if you need help.
thenortherner said:
I couldn't afford to buy a boat and rent my home out, unless I were to somehow remortgage my home, take the full equity out and start again.
So you can afford to then - the above sounds like a better plan to me. Get the property onto a BTL and get it rented out covering its costs and find a way to buy/ borrow to get the boat.
Leaves you in a better place long term - living where you want to but with a foot still in the property market.
I’d explore how long it could take you to achieve this setup as it feels like a better plan to me.
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