Thursday 20 June 2019

Your Questions: Will we get a mortgage after spending €6,000 on our wedding day?

 

Stock image
Stock image
Charlie Weston

Charlie Weston

Question: I am getting married in two months' time. We are financing the wedding ourselves, but it will be a smallish affair and we are hoping it won't cost more than €6,000. We know that we will get some money as gifts from guests, and we have worked out that after the wedding we should have reached our required deposit amount. We would like to put the wheels in motion to buy our first home. However, we are wondering if the bank will frown upon the fact that we spent €6,000 of our own money right before the mortgage application, and that our deposit was "subsidised" by money from weddings presents rather than our own savings?

Please log in or register with Independent.ie for free access to this article.

Log In

Answer: Some banks require you to have saved around 5pc of the purchase price yourselves but others do not.

What is more important to all lenders is that you are able to show sufficient capacity to repay your mortgage, according to Sinead Buckley of Mortgages4Her.ie. Regular savings, rent, and the repayment of a loan that will be redeemed prior to mortgage drawdown, are all allowable towards proving repayment capacity. Exceptional once-off costs, such as a wedding, can be taken into consideration on a case-by-case basis too if you are paying for those costs out of your own pocket, Ms Buckley says.

In your case, having spent €6,000 on your wedding in the past six months, this would be an average spend of say €1,000 monthly which can potentially be added back as savings as you could make a case that you would have saved the funds if you were not getting married.

Similarly, if you are paying rent monthly then the rent can be used as an example of proven repayment capacity instead of savings. So, presuming you meet all other requirements, banks should look favourably on your application.

Question: Following a sports injury, I am spending a lot of money on out-patient expenses such as physiotherapy, X-rays and acupuncture, but none of these are covered by my health insurance plan? Is there a better plan that I should be looking at to cover these expenses?

Answer: You need to consider a good-quality corporate plan as they all include guaranteed refunds on most out-patient expenses with no excess to pay first, according to Dermot Goode of TotalHealthCover.ie.

Most of the refunds are in the region of 50pc of the expense, depending on the policy, and all insurers now offer 'Scan & Send' which means you can claim your refunds immediately as you go.

Typical plans to consider include the Irish Life Health 4D Health 2 (€1,213), Laya Simply Connect Plus (€1,250) or the VHI PMI 0710 (€1,188), Mr Goode said. If this reader is insured with either of the first two insurers, they will allow a change of cover mid-term if the renewal has already passed. However, VHI will only permit plan changes at the renewal date, he said.

For maximum cover, this reader could also consider a cash plan from the likes of HSF Health Plan as these plans are designed specifically to cover out-patient expenses.

For an individual, Mr Goode recommends the One Scheme 3 at €515, which includes full cover for most out-patient expenses up to the plan limits.

Question: I am thinking of switching my health cover to one of these corporate plans but I have a number of underlying medical problems which require frequent day-case procedures in private hospitals. Would this be a good move for me?

Answer: Corporate plans represent the best value cover in the market, but they may not suit everyone.

For example, most corporate plans include small excesses per claim in private hospitals. For these day-case procedures, the excess is typically €50 to €75 per claim but on some of the older corporate plans, it could be as high as €125 per claim, according to Dermot Goode of TotalHealthCover.ie.

As this member is receiving ongoing treatment on a day-case basis, there is a risk that the multiple excesses might eliminate any savings that have been made. It may still be worth switching but a full cost-benefit analysis would be required to determine if the savings from switching coupled with the refunds on out-patient expenses would more than offset any day-case excesses that have to be paid, Mr Goode said. He recommends the reader seeks independent advice before making any changes. In the meantime, consider plans like the Irish Life Health 4D Health 2, Laya's Simply Connect Plus or the VHI PMI 0710 corporate schemes.

When making a mortgage application some banks require you to have saved around 5pc of the purchase price yourselves but others do not.

A good-quality corporate plan is worth considering as they all include guaranteed refunds on most out-patient expenses with no excess to pay first.

Irish Independent

Also in Business