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

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
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And why would you be bailing out the OP?
 
ajapale said:
.. it is very foolish to take out (very) long term debt to finance (very) short term expenditure.
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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.
 
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.
 
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.
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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?
 
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?
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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.
 
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".
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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
 
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.
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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?
 
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.
 
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.
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Not sure if this is a response to my last comment, in any case I think it's a terrible idea.
 
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?

Thanks,

DubGus
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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
 
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.
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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.
 
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?

Thanks,

DubGus
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Agreed.

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

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