Would it be more finance savvy to finance a principal home or a yacht?
Let say I have an $800K house with no lien, and I am making $100K/yr. salary. I have no debts. I’d to buy a $500K yacht. Would it be financially more savvy to take a first mortgage on the house to pay for the yacht up-front, or to finance the boat by itself with a boat loan? (With the least down-payment?)
There is an old adage that the happiest days of a boat owner’s life are they day he buys a boat and the day he sells it. If the numbers you show are correct, I don’t think you can afford this, even without any debt right now.
If you have never had a boat like this before, especially one so expensive, rent it for a summer first and see if you will really use it as much and enjoy it as much as you think. Then, the question becomes more one of tax deductibility and your ability to make the payments and other operating costs.
The payments on even a 20 year home equity line would be quite high on $500,000 – something on the order of $2,500 a month. Then there is gas, maintenance, insurance, dock fees, repairs, etc. Do you really want to spend more than third of your gross income on a toy? Or do you intend to make this a business – such as chartering fishing tips, etc.? I would seriously look at your budget and the total cost of owning this boat before going shopping.
Using your house to finance this might cost less because of the tax deductibility of the interest. But, if you miss a payment, they can take the house. If you miss a boat loan payment, they can only repo the boat.
So, I would say rent first to see if it something you really want, then calculate the total costs, and look into financing options later.
76 Ferretti Motor Yacht Disk
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