- Salli Anstey
As we gear up for a long and (hopefully) balmy summer, a brand-new school year waves at us from over the hill. For some families, thoughts are simply about new shoes, uniforms and school bags (could we squeeze out another year with the same ones?). For others, managing the finances to fund higher education, the first or another school year in private education may be on their minds.
The steadily rising cost of private education has meant it’s tougher to fund. The bill for seven years private secondary schooling can reach £60,000 – more than a third of the cost of the average home.
So, if this September, you’re looking to finance your child’s place in class, make sure you’re in the know about all the different ways that you can use your property, or that of a close family member, to pool resources and help. Here are a few:
Remortgaging
Mortgages can be structured in a variety of ways to include increasing or decreasing the amount you pay, interest-only or split repayment, enabling more flexibility when it comes to budgeting for school fees. With interest rates at an all-time low, there are some very reasonable mortgage deals out there with the opportunity to release a one-off lump sum, using the equity in your home. If your current property has increased in value and you have already reduced the size of the loan this should be quite straightforward. There are, of course, fees involved in remortgaging so it’s not a solution for every school year.
An Offset Mortgage
Offset mortgages have the option to draw funds as and when required, resulting in minimizing the overall interest paid on the loan. By switching to an offset deal, you can potentially “borrow” the maximum amount allowed, given your income and the property’s value. If you don’t use this maximum then you are not charged interest, but you are free to draw down funds up to this limit whenever needed, without prior authorisation from your lender. Regular overpayments can be made before the school year or during, if salaries are based on bonus payments.
Equity Release or Retirement Mortgages
Home owners over the age of 55 are eligible for equity release plans or retirement mortgages that enable them to unlock some of the value of their property, tax-free, while retaining full home ownership. They generally have the option to use the sale of the home as a means of repaying the debt. Funds released can either be converted to a guaranteed lump sum to help another family member, or a regular income, or a combination of both. At Private Wealth Mortgages, we are members of the Equity Release Council (ERC), the industry body for equity release mortgages, and are authorised and regulated by the Financial Conduct Authority (FCA).
Our team of expert mortgage advisers have a combined 30 years of experience in the whole of the mortgage market. We are happy to provide a free, no obligation chat where we will look at your personal financial circumstances, consider all the viable options available to you and advise on the best way forward. So, give us a call at Private Wealth Mortgages on 01403 270006 or email: info@privatewealthmortgages.co.uk