I've spent weeks at a time on a canalboat, but in the South of France (and while that sounds lovely, some of the canals freeze in winter, which is rare in the UK, and the ice crushes hulls).
For a family of five, you will need a big boat so at least 75 or 80 ft long, with a permanent mooring. Or, you have to move at least two miles every fortnight under british waterways rules.
You will need to understand your engine, gear box and generator to do the routine maintenance, and to do the checks every single week.
You need to factor in being able to pump out your black water (toilet) tanks at a specialist disposal point.
A houseboat in London with a permanent mooring is one thing; life as a canal rat, while cheap, is for the very practical 20-somethings. A young friend is living it during a post-grad, and it's gruelling stuff. Plus, because London's canals are a bit off the main drag, the banks are full of dodgy people, so security is always a bit of a worry.