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transmitterdan · 28-07-2017, 11:06

Free tax and legal advice can cost you a lot of trouble. Ask a CPA or IRS enrolled agent for advice. There are tax consequences that differ between heloc and regular mortgage.

danielamartindm · 28-07-2017, 11:10

Why not ask your accountant?

S/V Illusion · 28-07-2017, 11:31

Here's another suggestion - don't solicit financial advice on the internet from a bunch of boaters. Would you depend on sailing advice or engine mechanics advice from an accountant or tax lawyer?

JDeachman · 28-07-2017, 11:33

Most states protect a certain amount of home equity under a homestead law. Meaning, the equity is protected from unsecured creditors. If you take that equity and buy a boat with it, you lose the protection. Rule of thumb is, don't borrow against the equity in your home and don't borrow against your 401k. Both are protected assets.

wcapital · 28-07-2017, 11:33

On the other hand, if you have a HELOC (or 2nd mortgage) financing the boat, and the *** really hit's the fan in your financial world, it might be better to be able to lose just the house, say "chuck it", and sail away on the boat that you own unencumbered!

Generally, you'll get better terms with less hassle on the loan. Also, should you prosper and want to buy a 2nd home (besides the boat), you can still have the full interest deduction (you're only allowed primary + second, while I believe up to $100k of HELOC/2nd debt is deductible, whatever those funds are used for).

While the cautions against financing a depreciating asset are useful, it may be rational to borrow still very cheap money and use your cash for something else...hell, that's what our Federal Government (and many others around the world, and many corporations) have been doing for years.....

And if you are fortunate to have your house appreciate over the time you own the boat, you may just end up with as much equity in it as you have today, and own the boat "for free" (ok, that's a distorted angle, but you get the idea....).

Quote:

Originally Posted by vciavarelli

roverhi said:
If the **** should hit the fan, the economy collapse, your job(s) disappear and you have a home equity loan that you can't make the payments on, you'll lose the house to foreclosure in most states. With a boat loan, your credit rating and the boat are the only things that will be at risk.
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I 2nd this thought, why , if you are going to have a loan in the first place, jeapordize your home if something really bad happens financially.

farmall.dude · 28-07-2017, 12:07

Quote:

Originally Posted by wcapital

On the other hand, if you have a HELOC (or 2nd mortgage) financing the boat, and the *** really hit's the fan in your financial world, it might be better to be able to lose just the house, say "chuck it", and sail away on the boat that you own unencumbered!

Ha! That's exactly what I was thinking!

Dave22q · 28-07-2017, 12:50

Cheapest credit for most is a margin loan at your broker. Next a home mortgage (first). Then in approximate order 2-ed mortgage/ home equity credit, new car loan, short term secured note at your bank, used car loan, and lastly credit card debt. A boat loan would generally rank below a used car loan, way below if you have no land based home. Like everything else, the rich have their own rules which their banks adjust all of the time. Best to check specific terms and options with your bank. Some banks will not touch marine loans.

hamburking · 28-07-2017, 16:14

Quote:

Originally Posted by chris mac

US may be different, I'm in Canada. You will get a much better interest rate off of a heloc vs a boat loan. House secured vs depreciating asset secured.

Agree!

Currently, you can get a HELOC at 2.99% (TD promotion).
Also, the line of credit is far superior to the "boat loan". The LOC gives you a ton of flexibility and is a useful tool for your life, not just your boat. The boat loan is usually at a higher rate and more rigid terms...intended for people who really can't afford their boat.