save for wedding or pay down mortgage?

borokat

Hi all
I'm after a bit of pragmatic advice. (which does not include being told don't spend any money on your wedding, I'm going to no matter what!)
I am currently saving up for my wedding next summer, putting away £350 per month in an ISA. I have just got a 0% till October 2011 credit card which I have put the deposit for my honeymoon and down payment on my wedding dress onto. I estimate the total costs of the wedding to be £7,000. At my current rate of saving I will have more than £5k saved up by the wedding date, and I expect my fianc! to save up the remaining £2k (we earn a similar wage but he pays for our car and so can’t save as much as me).

On 31st July 2011 my current mortgage deal with Halifax comes to an end. We are currently paying 6.19% fixed rate for 3 years paying the mortgage off over 40 years in total (36 years to go - we were only 22 when we first got the mortgage). I’m not sure how much equity we have, but I originally put down a 6.5% deposit.

My question is this: Am I better off using my savings to pay a chunk off our mortgage and increase our chances of getting a better deal when our current one expires? In this scenario I would apply for another 0% credit card ( I have never been turned down for one yet) and use that to pay for the wedding things. Or would having the outstanding credit card block me from better deals anyway?

Another thing to consider is the current interest rates – if the SVR stays as low as it is now (Halifax’s is 3.5%) then we just go straight onto that keep up our current payments (and some extra) and we’ll be paying off capital anyway.

I am also worried about how we’re going to organise a new mortgage while we’re in the middle of wedding preparations and then going on honeymoon!

What would you do in my situation? (Sorry it’s a long rambling post!)

TrickyDicky101

If you bought your property in 2008 with only a 6.5% deposit (and are repaying your mortgage over 40 years) it is quite likely that you could be in negative equity territory now and thus you won't have access to any other mortgage products. Do you know what your house is worth at the moment?

pinkteapot

In your situation I would leave the mortgage and use the savings to pay for the wedding. It's all well and good putting the wedding on a 0% credit card, but if something goes wrong (e.g. redundancy) you could end up taking a long time to pay that card off and then having to pay credit card interest rate on it, which will be much higher than your mortgage rate. If instead you use savings to pay for the wedding, you're effectively paying the mortgage interest rate on the same amount.

After the wedding, you could use the £350/month you're currently saving to make overpayments on the mortgage.

We got married in June, exchanged on our house purchase two days before the wedding and completed a month after our honeymoon. You'll be surprised how much you can handle doing at once if you need to. :rotfl: But personally, for stress avoidance, I'd leave the sorting out of a new mortgage deal till after the honeymoon, even if it means a couple of months on the SVR. In fact, at current rates (depending on what they are next year), as you said the SVR could actually be good for you.

borokat

TrickyDicky101 wrote: »

If you bought your property in 2008 with only a 6.5% deposit (and are repaying your mortgage over 40 years) it is quite likely that you could be in negative equity territory now and thus you won't have access to any other mortgage products. Do you know what your house is worth at the moment?

Sorry we bought the flat back in 2006 with a 6.5% deposit. So before the market peaked. I know things are bad with the housing market but we have done a lot of work on the property since buying it. Other flats on the same street sold for around 10k more than ours. Optimistically I would say we should get £95k plus for it, realistically £90k which leaves us with a little bit of equity.

dollydiva

£7000 on a wedding? Really? Wow...I got married on £350 for dress, flowers, reception, food, ring (Ratners finest, £17), service, licence...the whole kit and caboodle.
Now we've been married 26 years I can think that it would have been nice to have had a big wedding, but we just couldn't afford it...which really you can't quite either looking at how you're stretching it. Better to have some money to fall back on than some expensive wedding album to look through at the one day in your lives which put you in penury.

borokat

dollydiva wrote: »

£7000 on a wedding? Really? Wow...I got married on £350 for dress, flowers, reception, food, ring (Ratners finest, £17), service, licence...the whole kit and caboodle.
Now we've been married 26 years I can think that it would have been nice to have had a big wedding, but we just couldn't afford it...which really you can't quite either looking at how you're stretching it. Better to have some money to fall back on than some expensive wedding album to look through at the one day in your lives which put you in penury.

But I'm not going into debt to pay for the wedding - I'm saving for it every month. I've got a 0% credit card to pay for things up front, and the cash to pay off the card is in a savings account.
And £7000 is just what I'm paying towards it, my parents are also making a big contribution.

I don't want to cause any offence here but why do people answer posts without offering any advice?

TrickyDicky

borokat wrote: »

But I'm not going into debt to pay for the wedding - I'm saving for it every month. I've got a 0% credit card to pay for things up front, and the cash to pay off the card is in a savings account.
And £7000 is just what I'm paying towards it, my parents are also making a big contribution.

I don't want to cause any offence here but why do people answer posts without offering any advice?

I think you answered your own question already. With the 0% credit cards you're paying for the wedding up front, but when the 0% expires, all your savings are going to pay off the cards, so you'll actually have no money left to put into the house.

You cannot rely on paying off debt with more debt ( another 0% credit card). At some point this runs dry, and the lenders will see the credit cards when they do a credit check.

So in my mind you have 2 options - a wedding or a better mortgage deal. And you've already said a cheaper wedding is not an option, so you're stuck with your current mortgage.

frugalfreddie

I've been engaged to my girlfriend for over 2 years now and although we'd love to get married, the money situation just isn't good enough. What I would personally do is put towards the house as a wedding is only one day but your property is for life. However, you seem to be in a tricky situation with having already arranged your honeymoon etc, which would be completely pointless if you weren't married! To me, it seems like you've already made up your mind to go for the wedding so I would do what feels right =].

Fred.