# Hoping to build: Can you put Wedding Costs into Mortgage without Bank knowing



## start (10 Oct 2008)

We are hoping to build in the near future - Can you incorporate 30-40 K into the mortgage or do the banks look for receipts for every cost on the build. i.e. if the house was going to cost 280K , we will look for a 320K mortgage and with the extra money pay for the wedding and other costs (8K loan at a higher interest rate to pay off).  Can this be done?


----------



## PaddyW (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*

The banks will lend you what they see fit after performing a valuation of your house. If your house is valued at say 360k by their valuer and they are offering you 90% then you should get 320k, but if the house is valued lower you may not. Wel, that's my take on it, I stand corrected.


----------



## NorfBank (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*

The house will have to be professionally costed. Once the house is completed and you have equity left AND you can afford it then there is nothing to stop you getting a top up.
Seriously though we're in the grips of a recession, is it wise to borrow that much money to pay for a wedding. I'll answer that for you - it's not wise, it's pretty crazy. Then again I don't know your circumstances but would advise postponing the wedding and saving up for it.


----------



## WaterSprite (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*

I think for a house build (as opposed to a straight buy), they look for receipts every step of the way.  Even with a house buy, they look for evidence of the actual price agreed/paid and not just the valuation - I'm pretty sure.

Sprite


----------



## plant43 (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*

They don't look for actual price paid when buying a house. So long as you're borrowing within the value of the house as per their valuation, they don't really care what you spend the money on.


----------



## Ceist Beag (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*



start said:


> We are hoping to build in the near future - Can you incorporate 30-40 K into the mortgage or do the banks look for receipts for every cost on the build. i.e. if the house was going to cost 280K , we will look for a 320K mortgage and with the extra money pay for the wedding and other costs (8K loan at a higher interest rate to pay off).  Can this be done?



start, just think about what you're looking to do ... you want to pay off your wedding over the next 30 odd years? Are you sure you really want to do that, ignoring for a minute the question of what the banks will lend? From the sums above you're talking at a wedding cost of between 22K-32K - if you don't have any savings I'd say you're mad to even consider this cost!


----------



## krissovo (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*



Ceist Beag said:


> start, just think about what you're looking to do ... you want to pay off your wedding over the next 30 odd years? Are you sure you really want to do that, ignoring for a minute the question of what the banks will lend? From the sums above you're talking at a wedding cost of between 22K-32K - if you don't have any savings I'd say you're mad to even consider this cost!




Totally agree 30 years to pay off a wedding is just crazy.  I am doing both at the moment building and planning a wedding.  I have made it clear if we only have 10k in the bank for a wedding that is all we will spend.  There is a great book out called "Champagne wedding at bucks fizz price".  I would have a look at that.


----------



## cjh (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*

35,000 borrowed over 30 years at 5% incurs approx 32,500 interest, meaning the wedding will cost 67,500.
Are you prepared to spend this much on one day?


----------



## NorfBank (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*

To be fair to the OP, he could split the mortgage with the wedding cost on a 5 year term (not that I am advising this course of action just giving some objectivity).


----------



## delboy159 (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*



WaterSprite said:


> I think for a house build (as opposed to a straight buy), they look for receipts every step of the way. Even with a house buy, they look for evidence of the actual price agreed/paid and not just the valuation - I'm pretty sure.
> 
> Sprite


 
The bank doesn't look for a single receipt.  It is the job of the engineer to confirm that each stage of the build is completed to the proper standard and that an amount of the mortgage can be drawn down on the basis of that work.  Simple example.  It takes one guy 30k to get the house to floor level, another guy may well take 70k - genuinley!  Cheap one was on great ground and only needed 3 courses of blocks and little drainage.  The second guy needed 7 courses and re-inforced walls and expensive drainage!!!  Once the engineer signs off on it - that's all the bank needs!  If you wanted to pay for a wedding you could "hide" a few thousand in each stage of the build. Whose to say it cost you 55k to build the roof or 58.5k???? Both figures are "normal".... 

Saying all of the above - putting a wedding on your mortgage is not a good idea... CJH is spot on in outlining that it will end up costing double in the long run!


----------



## becky (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*

I agree its a bad idea to borrow for this at all.  I'd put off the wedding until I could afford it.


----------



## WaterSprite (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*



delboy159 said:


> The bank doesn't look for a single receipt.  It is the job of the engineer to confirm that each stage of the build is completed to the proper standard and that an amount of the mortgage can be drawn down on the basis of that work.  Simple example.  It takes one guy 30k to get the house to floor level, another guy may well take 70k - genuinley!  Cheap one was on great ground and only needed 3 courses of blocks and little drainage.  The second guy needed 7 courses and re-inforced walls and expensive drainage!!!  Once the engineer signs off on it - that's all the bank needs!  If you wanted to pay for a wedding you could "hide" a few thousand in each stage of the build. Whose to say it cost you 55k to build the roof or 58.5k???? Both figures are "normal"....
> 
> Saying all of the above - putting a wedding on your mortgage is not a good idea... CJH is spot on in outlining that it will end up costing double in the long run!



Grand so - thanks.  I thought I remembered from buddies of mine that built that they had to provide receipts to the bank for works done but don't have first hand experience so can't comment (and probably shouldn't have !)  Also, in the house-buy issue, when I was going for approval in the summer, the bank wanted the "sale agreed" price so they calculate the LTV amount from that - again, other procedures may apply for other folks.  Looks like I was wrong on both counts!

Sprite


----------



## ajapale (10 Oct 2008)

start said:


> We are hoping to build in the near future - Can you incorporate 30-40 K into the mortgage or do the banks look for receipts for every cost on the build. i.e. if the house was going to cost 280K , we will look for a 320K mortgage and with the extra money pay for the wedding and other costs (8K loan at a higher interest rate to pay off).  Can this be done?



Quite apart from the being able to do this - it is very foolish to take out (very) long term debt to finance (very) short term expenditure.


----------



## ubiquitous (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*



WaterSprite said:


> I thought I remembered from buddies of mine that built that they had to provide receipts to the bank for works done but don't have first hand experience so can't comment
> Sprite



I had to provide a detailed costing to the building society before I got my mortgage. This was in 1999.


----------



## Brendan Burgess (10 Oct 2008)

> you want to pay off your wedding over the next 30 odd years? Are you sure you really want to do that,


 
I would not be a fan of expensive weddings. But if someone wants to pay off a once in a lifetime cost over many years, that is fine. 

The cheapest way to borrow for your wedding, is your mortgage. You may have a 30 year mortgage, but that does not stop you paying it off long before that. 



> 35,000 borrowed over 30 years at 5% incurs approx 32,500 interest, meaning the wedding will cost 67,500.
> Are you prepared to spend this much on one day?


 
This is completely misleading.  A wedding costing €32,500 today, costs €32,500 whether you pay for it in cash or through borrowing. 

Look at it another way, if you buy a house today for €200k on a 20 year mortgage, it still costs you €200,000. I have never heard of anyone in that situations say "I paid €350,000 for my house". 

I am glad to see that you did not put a "€" sign in front of the 67,500. Because what is that 67,500? It's a completely artificial sum of 4,000 of 2008 euros , with 4,000 of  2009 euros etc. You cannot treat a € paid today with a € paid in 2035 as equal.


Brendan


----------



## angela59 (10 Oct 2008)

Hi,

If you're building -the will give you a mortgage based on the land value and the house you are hoping to build - but they might asked for you to go fixed price rather than direct labour and the might put this into one of the conditions of the mortgage they loan you.  With regards to the wedding - up to yourself but borrowing that extra money would go a long long way on finishing your house - I know we built our own and a new build just absorbs money - so my opinion for what it is worth by all means try and get the mortgage for your new build but use every penny you can for it and enjoy your house for many years to come - the wedding can be downscaled - you will be a long time paying of that extra 30 or 40 grand for the sake of 1 day whereas put it in to your house and you'll enjoy it for along time.

Best of luck with your decision.

Angela59


----------



## Red (10 Oct 2008)

Bear in mind, you can only claim mortgage interest relief on the proportion of the mortgage which is for the house.


----------



## LadyJane (10 Oct 2008)

Brendan said:


> I would not be a fan of expensive weddings. But if someone wants to pay off a once in a lifetime cost over many years, that is fine.


 
I agree. When I first read this post, I was just waiting for everyone to chime in telling the OP how insane they were for funding their wedding through their mortgage. Surely this is the OP's decision and not part of the advice they were looking for. 

Best of luck on the house and the wedding!


----------



## juke (10 Oct 2008)

*Re: Can you put Wedding Costs into Mortgage without Bank knowing*



WaterSprite said:


> Grand so - thanks.  I thought I remembered from buddies of mine that built that they had to provide receipts to the bank for works done



Had clients who borrowed from Ulster Bank and that's exactly what they had to do - unusual, mind you


----------



## Stapeler (10 Oct 2008)

We did it 10yrs ago when weddings were a bit cheaper. Had the theory that if marriage lasted as long as the mortgage then it would be worth it .


----------



## dazza21ie (11 Oct 2008)

DubGus said:


> It is indeed the OP's decision, but unfortunately, many decisions like tis contributed to bring the economy to the state it is in now. *I do not want to pay a penny to bail out somebody that has no money to pay for his own wedding* *but thinks it is fine to borrow for it against the house.* It's time for people to wake up and stop with tis nonsense, moreover vested interests in this forum should stop giving bad advice.
> Good luck,
> DubGus


 
And why would you be bailing out the OP?


----------



## ajapale (11 Oct 2008)

ajapale said:


> .. it is very foolish to take out (very) long term debt to finance (very) short term expenditure.



Your mortgage may well be the cheapest way to finance your wedding (if you can repay the wedding element early - not always possible) but I still contend it is not the wisest way.


----------



## PM1234 (11 Oct 2008)

Your lender requirements depend on the conditions of your loan offer.  They make look for valuations as each stage payment is requested and released.

It is a fairly common occurrence for self builds to have over-runs. So if you are approved €280K and find you have additional costs  you may find yourself applying for additional funds at the latter stages of the build.  But as it depends on valuations and mortgage eligibility, it is not guaranteed.

One outcome of your suggestion is that you have a mortgage for €320K and a property that has a value of €280K. You are straight into negative equity. If you find yourself in financial difficulty you will have to make up the shortfall.


----------



## DubGus (11 Oct 2008)

dazza21ie said:


> And why would you be bailing out the OP?


The taxpayers will, including me. Who do you think is bailing out the banks now?


----------



## rmelly (11 Oct 2008)

PM1234 said:


> One outcome of your suggestion is that you have a mortgage for €320K and a property that has a value of €280K. You are straight into negative equity. If you find yourself in financial difficulty you will have to make up the shortfall.


 
In the case of a self build surely the total value should include the pre-existing land, so while the house might be cost/be worth 280k, the entire property including the land it sits on would be more, and most likely would exceed the outstanding mortgage of 320k?


----------



## PM1234 (11 Oct 2008)

rmelly said:


> In the case of a self build surely the total value should include the pre-existing land, so while the house might be cost/be worth 280k, the entire property including the land it sits on would be more, and most likely would exceed the outstanding mortgage of 320k?



It depends on how the site is obtained ie  if mortgage approval is for the total cost of the build including construction and site purchase.


----------



## DubGus (11 Oct 2008)

Brendan said:


> This is completely misleading. A wedding costing €32,500 today, costs €32,500 whether you pay for it in cash or through borrowing.
> 
> Look at it another way, if you buy a house today for €200k on a 20 year mortgage, it still costs you €200,000. I have never heard of anyone in that situations say "I paid €350,000 for my house".


 
Let me get this straight, are you saying that interest paid in servicing a mortgage is not a cost?

Say, I have a 200k in the bank and I buy a house outright and you have 
nothing and you get 200k mortgage for a house that is the same as mine, who's incurring in the highest cost?

Thanks,

DubGus


----------



## rmelly (11 Oct 2008)

PM1234 said:


> It depends on how the site is obtained ie if mortgage approval is for the total cost of the build including construction and site purchase.


 
In this case my reading of what the OP has posted suggests it isn't included in the 280k - maybe the OP can clear this up?


----------



## PM1234 (11 Oct 2008)

What is being suggested is not as simple as it seems. 

Lenders are now even stricter. The lender will require (possibly fixed) builders quotes, architects certificates and may apply a retention pending valuations.


----------



## rmelly (11 Oct 2008)

PM1234 said:


> What is being suggested is not as simple as it seems.
> 
> Lenders are now even stricter. The lender will require (possibly fixed) builders quotes, architects certificates and may apply a retention pending valuations.


 
Not sure if this is a response to my last comment, in any case I think it's a terrible idea.


----------



## amgd28 (11 Oct 2008)

DubGus said:


> Let me get this straight, are you saying that interest paid in servicing a mortgage is not a cost?
> 
> Say, I have a 200k in the bank and I buy a house outright and you have
> nothing and you get 200k mortgage for a house that is the same as mine, who's incurring in the highest cost?
> ...



I think it is debatable. While in your first scenario, you are not incurring mortgage interest cost, you are also *foregoing the opportunity cost* of applying that 200k to another project (high-yielding deposit account, pension fund, mutual fund, purchasing a business etc etc). In the second scenario, the person may well have the cash available to purchase outright, but can get a far better rate of return than the rate they are paying on their mortgage to make it work somewhere else. In that scenario, the perfectly logical choice would be to get a mortgage and to use the 200k cash to fund higher-yield investments.

If on the other hand, you are suggesting that debt is bad in all cases, then you obviously pine for the 19th century, because like them or loathe them, you would not be sitting at a computer without banks and the debt they provide to bring living standards to where they are today


----------



## z103 (11 Oct 2008)

> The cheapest way to borrow for your wedding, is your mortgage. You may have a 30 year mortgage, but that does not stop you paying it off long before that.


It might be the cheapest (if they do indeed have the discipline to pay it off early) but it is also probably the most riskiest. Their mortgage is secured on their house. If the additional repayments cause the OP to get into financial difficulty, their house is at risk.
In the current climate of rising unemployment and financial uncertainty, I would be trying to reduce outgoings.


----------



## polaris (11 Oct 2008)

DubGus said:


> Let me get this straight, are you saying that interest paid in servicing a mortgage is not a cost?
> 
> Say, I have a 200k in the bank and I buy a house outright and you have
> nothing and you get 200k mortgage for a house that is the same as mine, who's incurring in the highest cost?
> ...



Agreed.

To answer Brendan's question, numerous personal finance websites, articles in newspapers etc frequently give the total cost of borrowing money.


----------



## Steve D (12 Oct 2008)

If you cannot afford the wedding without putting it on the mortgage, then is is either best to save up for it or else have a smaller wedding. 

The country is in a recession and in a recession it is best to have as little as possible debt. By increasing your mortgage to pay for the wedding you could be storing up big problems in the future.

It is senseless borrowing like this that has almost brought the world's economy to its knees and I would think that because so many banks have now suffered from being too lenient with loans in the past, that they are going to be very much more stringent in the future.


----------



## DubGus (13 Oct 2008)

amgd28 said:


> I think it is debatable. While in your first scenario, you are not incurring mortgage interest cost, you are also *foregoing the opportunity cost* of applying that 200k to another project (high-yielding deposit account, pension fund, mutual fund, purchasing a business etc etc). In the second scenario, the person may well have the cash available to purchase outright, but can get a far better rate of return than the rate they are paying on their mortgage to make it work somewhere else. In that scenario, the perfectly logical choice would be to get a mortgage and to use the 200k cash to fund higher-yield investments.
> 
> If on the other hand, you are suggesting that debt is bad in all cases, then you obviously pine for the 19th century, because like them or loathe them, you would not be sitting at a computer without banks and the debt they provide to bring living standards to where they are today


 
Did you "forget" to mention risk by any chance?

I'm not suggesting debt is bad in any case, we were talking about somebody who cannot afford his wedding but wants both to get married and build a house, let's try not to change the cards on the table.


----------



## DerKaiser (13 Oct 2008)

I think the most important question is how secure is your job and how affordable would the repayments be.

Secondly if you're just borrowing for the build and not the site then the extra bit for the wedding could be seen as borrowing against the site and would be possible.


----------



## Bronte (13 Oct 2008)

If the OP had the house built and went into the bank for a loan to pay for a wedding the only difference would be that the rate of interest on the loan would be higher but it would be over a shorter period.  OP if you don't have to provide receipts then you should have no problem adding the wedding costs to your mortgage and if you can repay it then why not if that's what you want to do.  Personally I dont agree with expensive weddings and borrowing for same but that's up to you.


----------



## z103 (13 Oct 2008)

> If the OP had the house built and went into the bank for a loan to pay for a wedding the only difference would be that the rate of interest on the loan would be higher but it would be over a shorter period.


I don't think this is true (see my post above)
The OP is securing the cost of the wedding against their house, which is much more risky (for the OP) than an unsecured loan.


----------



## start (13 Oct 2008)

Quote:
Originally Posted by *PM1234* http://www.askaboutmoney.com/showthread.php?p=723328#post723328 
_It depends on how the site is obtained ie if mortgage approval is for the total cost of the build including construction and site purchase._

In this case my reading of what the OP has posted suggests it isn't included in the 280k - maybe the OP can clear this up?

=======================
The site is a gift from the parents so there will be no site purchase fee. 280 K is the total cost hopefully


----------



## moondance (13 Oct 2008)

The OP is not asking for opinions on whether people think it's a good idea or not, they are just asking can it be done. And yes it can be done in my experience of building a house. I also know a lot of people who used a chunk of their mortgage to pay off credit card debt, fund holidays, etc. That's their choice!


----------



## Bronte (13 Oct 2008)

leghorn said:


> I don't think this is true (see my post above)
> The OP is securing the cost of the wedding against their house, which is much more risky (for the OP) than an unsecured loan.


 It doesn't matter if the loan is secured or unsecured.  The bank will be coming after your house if you default on a personal loan.  IT's easier ot get a personal loan because you have an asset.  The mortgage is a relatively cheap way of borrowing, certainly cheaper than an overdraft or personal loan depending on the loan term etc.


----------



## start (27 Jun 2009)

Hi, 
Thanks for all of the comments. We just want to know which is the cheaper option, not whether or not we will cancel the wedding as that is definitely going ahead.!! 
 Yes we are in secure jobs and Yes , We are all going to plan with the build , the mortgage and the wedding thankfully!  Just to clarify a few points. The site was a gift from the parents so was free. We got a 315K mortgage and the final value will be in the region of 540K. The build will come in around 260k, so we have money to spare for the wedding if we wish to take up that option. 

So my big question really is , should we take out 15-20 k for the wedding on  a  new 5 year loan  or should we use 15-20k from the mortgage? Can someone do the Maths for me, I am not very good at Finance related matters like this . 

Thanks


----------



## Robin Banks (28 Jun 2009)

start said:


> So my big question really is , should we take out 15-20 k for the wedding on a new 5 year loan or should we use 15-20k from the mortgage?


 
Borrowing €15,000 euro

5 year personal loan at 8.4% will cost €3,421.53 in interest.
35 year mortgage at 5% (estimated long term average rate) will cost €16,795 in interest.

So you'd be far better off taking out the personal loan imo. There is also the additional benefit of being above board and not deceiving the bank/taxman etc.


----------

