Wedding Loans: An Introductory Guide
Planning a memorable wedding is not for the faint-hearted. Both in terms of the logistics involved and the costs, it can be a surprisingly time-consuming and complex endeavour.
According to the latest National Wedding Survey (conducted by Hitched.co.uk), the average cost of a wedding in 2021 was £17,300. This marks a dramatic increase from the £9,100 average in 2020, and is set to continue escalating as inflation continues to skyrocket.
In general, experts recommend setting aside around £20,000 as a base figure, once all expenses have been factored in.
Unfortunately, this simply isn’t the kind of money most people have lying around. Some couples save for several years to pay for their dream weddings, while others turn to family members for support. But there is a practical and flexible alternative for those who can neither save nor borrow the money they need from their loved ones.
Designed specifically for making special days as special as they can be, a wedding loan could be just the thing to make the whole thing more affordable.
What Are Wedding Loans?
Wedding loans are typically issued in the form of unsecured personal loans, but there are also secured borrowing options available. Terms, conditions and borrowing costs vary in accordance with how much you borrow, the length of the repayment period and your credit status.
Depending on the lender you choose, you could be looking at total interest payable of anything from 5% to more than 35%. The balance of the loan can be repaid over monthly instalments spanning one to 10 years, and there is no upfront payment (deposit) required.
Some banks issue standard personal loans which can be used to fund weddings, while others provide specialist wedding loans issued exclusively for this purpose. Either way, the money can be used to cover the costs of venue hire, catering, transport, attire, décor and even the honeymoon of a lifetime.
How Much Money Can I Borrow with a Wedding Loan?
The amount you can borrow will be determined by your financial status and creditworthiness at the time of your application. In the case of an unsecured personal loan, the following factors will be taken into account by your lender:
- Your credit score
- Whether you apply individually or as a couple
- Your chosen lender
- Your income and debt
- Your general financial status
With personal loans for weddings, it is possible to borrow anything from £1,000 to around £15,000 – depending on your financial circumstances at the time. For figures in excess of this, a secured loan could be a better option.
With a secured loan, there are technically no limitations to how much you can borrow. The loan is secured against assets of value (usually the home of the borrower) in the same way as a mortgage.
Secured loans are typically issued in sums of £10,000 or more, and can attach lower rates of interest than comparable unsecured loans. However, it is important to acknowledge the fact that your home may be at risk of repossession if you do not keep up with your monthly repayments.
When Should You Get a Wedding Loan?
Applying for a wedding loan could be the best course of action if the following apply:
- You need the money as quickly as possible, either having decided to get married in the near future, or with the date of your wedding approaching and various costs still outstanding.
- Your credit score is up to scratch, as this is the main factor that will determine your eligibility for an unsecured personal loan.
- You can comfortably afford the monthly repayments, having considered both your immediate and your long-term financial situation.
Before applying, consult with an independent broker to discuss your eligibility for wedding finance and the various unsecured and secured funding options available.
How to Get a Loan for a Wedding
If you need to borrow money to pay for a wedding, there are a few steps to take before the money hits your account.
Pros and Cons of Wedding Loans
Broker support is essential to ensure you get a good deal on a wedding loan. Your broker will scour the market in its entirety to find you an appropriate product and will negotiate on your behalf to ensure you get the best possible deal.
In addition, your broker will ensure you are familiar with the basic pros and cons of wedding loans, which are as follows:
- Wedding loans can be secured or unsecured. This opens the door to a variety of different types of loans for all applicants, including those with poor credit or no formal proof of income.
- Interest rates are lower than credit cards. Interest rates on credit cards can be anything from 0% to more than 25%. With a typical short-term wedding loan, you could be looking at an interest rate of around 5%.
- Fast access funding available. With specialist products like bridging loans, the money you need could be in your account and ready to use within a few working days.
- Additional debt. By taking out a wedding loan, you will have one more formal debt to contend with when the dust settles.
- Temptation to overspend. There is also the undeniable temptation to borrow more than you need and more than you can afford to make your wedding as lavish as possible.
- Restricted lending. Unsecured wedding loans are issued exclusively to borrowers with an excellent credit score and extensive proof of their financial position.
Alternatives to Wedding Loans
Where specialist wedding loans are unavailable or simply not your preferred choice, the following can also be used to cover the costs of a wedding:
Some credit cards provide new customers with an introductory 0% interest period, which can be great for spreading the costs of larger purchases or investments over a year or so.
Fast-access bridging loans are ideal where short-term repayment is possible, charged at around 0.5% more a month and with minimal associated borrowing costs.
Home Equity Loan
There is also the option of borrowing against the equity you have tied up in your home in the form of a remortgage, a mortgage extension or a specialist home equity loan.
Before deciding which of the options is best for you, consult with an independent broker for their input and advice. Your broker will also provide the representation you need to ensure you get the best possible deal, whichever product you decide to apply for.