Paying school fees - second mortgage

waveneygnome

Hope some of you could help.

Our son is really struggling at our local village school, and we are out of catchment area for another state primary school. There are two private prep schools locally.........and as much as I hate to admit it..........we may be heading this way.

I am self-employed and constantly worry about future earnings (or lack of), hence I have been fairly conservative in my borrowings in the past. My mother in law has offered to sell her house and move in with us to pay for fees (approx £10k pa). She is 73yrs old and fit as a fiddle, but I don't really want her to uproot herself at this age (she lives 100 miles away, but spends half her time living with us at present)

Own house: value £400k, offset mortgage of £100k, plus business loan of £65k (i.e. £165k mortgage, with agreed facility of £200k)
Mother in laws house: £250k, no mortgage

My earnings £50k
Wifes earning £13k

Our current house/mortgage is in joint names.

Questions:

a) if we were to take my wifes name off our current house, would it be possible: for wife to be joint owner of MIL house & take out a mortgage on MIL house? (then MIL could stay in house; and son go to private school; we just pay interest on mortgage; capital repaid....eventually when MIL passes away)
b) would we need to take wifes name off current house/mortgage?
c) what else should we consider (my wife is an only child/sole beneficary should MIL die; no IHT tax as not near/over threashold)

We reckon that we need £50k from MIL house.....assuming 5% interest = £2500 pa repayments, compared to £10k if funded direct from us (which we can't afford). If we could get the £50k, we would offset this in our mortgage account and draw the £10k fees down over the next 5 yrs.......so would not cost us the full £2500 extra each year until yr 5.

I know I could probably borrow more on our own house, but psycologically it feels better if the loan is on another property...........or am I being an idiot?

chivers1977

The way I see it you are securing your debt against your MIL's property - which does not seem a great idea if you are concerned about the current climate? Would it not be easier to pay for a tutor as this would mean that you would not need to uproot your son from his school. EDIT just seen that your son is only 5-6 years old. It may not be the school is doing anything wrong but that he is a boy and will just suddenly "get" it and then be a flyer. This seems to be a boy-thing!

Another thought is that your o/s mortgage is not huge compared to your earnings. What are you paying - around £1k per month? How about posting your SOA on Debt free wannabee as they are great at looking at outgoings and providing ideas on how to free up cash. It could well be that you could actually afford to pay £2500 school fees without borrowing. We managed a £965pm mortgage and full time day nursery on around £40k and you are on £63k.....

Please don't take this as a criticism of your plans but it looks like there might be other ways around it than MIL moving out or potentially putting MIL's property at risk.....

Batchy

if you sell your 400k house, and buy a 350k house... then you will not need to do anything more, even possibly moving closer to the school in question, giving fuel saving benefits.

simple solution or too much of a sacrafice?

Batchy

I was only speaking to a guy a work yesterday, with a wealthy family.

He mentioned how his 3 grandkids, 2 went to private school, huge fee's honest and hard working since going but lacking some ambition, never pushed on or went to uni.

other one, went to state school, nice school, nothing special, just where her mom went, and she pushed on is currently going to college getting A's and heading for a TOP red brick UNI and doing LAW.

10kpa, are you sure this is what you want to do?

good luck in what ever you choose.

I find being top of a class makes you strong, even if the class is weak, being bottom of a strong class, isn't great, and generally, you will get bullied. Don't REACH too far.

Private tutoring would be a great idea.

967stuart

I would 100% get a private educator in and assess what exactly is the issue, i.e is the school failing your son or is your son just not an academic bright spark (no disrespect intended), if I was in your shoes I would explore this avenue before considering what you are proposing to do.

Good luck with what ever you way you go.

mr_fishbulb

Batchy wrote: »

if you sell your 400k house, and buy a 350k house... then you will not need to do anything more, even possibly moving closer to the school in question, giving fuel saving benefits.

simple solution or too much of a sacrafice?

Stamp duty = £10,500
Estate agent fee ~ £6,000 - £8,000 (1.5% - 2%)
Legal fees, searching fees, removals costs, surveys, charges associated with porting the mortgage over...

Not much left over.

HarrowArrow

967stuart wrote: »

I would 100% get a private educator in and assess what exactly is the issue, i.e is the school failing your son or is your son just not an academic bright spark (no disrespect intended), if I was in your shoes I would explore this avenue before considering what you are proposing to do.

Good luck with what ever you way you go.

I would agree with this - aren't private schools selective anyway (by exam), so you might make a huge financial commitment and then he doesn't get in ?:eek: (sorry to scaremonger, I may be wrong, no experience of the private sector, so to speak).

sillystudent_2

First of all OP, I just want to say how much respect I have for you and your wife being prepared to make this kind of financial sacrifice for your kid's education not that private school is the be all and end all mind you (in fact the UK's state system is pretty good) but if your child is clearly struggling, it may well be the best thing for him.

To be fair I'm a bit biased in my parents did exactly what you're thinking of now for my sister and I when we were about the same age (I was 7, my sister 5.) Especially me - I struggled to write and speak particularly well as a young child, and was trailing behind my peers at the local state school (which was crap, to be fair, and well below the standard of your average state school.) My mum couldn't understand it, she thought I seemed to have so much potential yet the school had written me off with 'learning difficulties' and - put it this way - none of the teachers thought I'd be training to be a doctor one day So in the end my parents remortgaged their house to pay for us to go to private primary and secondary school, something which I'll always be grateful for

I'd like to think it was a success story - I became a straight-A student at GCSE/A-level, and I'm now at medical school, and though I've had my fair share of academic struggles at uni it's safe to say I probably wouldn't be here if I hadn't got that better education. My sister's just started at a redbrick uni this year, doing geography - she also started to flourish academically after switching schools.
Financially it thankfully worked out for my parents - the remortgage was in the early 1990s, so rising house prices + parents' salaries going up dramatically meant that it didn't end up being a problem, in fact they paid off their mortgage a while back i think.

As for financial advice to you - sorry, I don't have that much, as a student I'm afraid I don't know that much about mortgages however from the sound of it remortgaging (assuming you've got enough equity) would be by far the cheapest option.

Just thought I'd add my story Obviously your son could be struggling for completely different reasons to me (i.e. I'm not saying private school is 100% the right decision) but nonetheless I thought I'd throw my two cents in.

Your son's very lucky that you are a) in a position to afford private school, and b) more importantly, that you care that much about his education. Good luck, hope it all works out

waveneygnome

Thanks for all the comments. I'll try and answer a few of your points:

a) Downsizing: we did think about this, but as mr_fishbulb points out, not much change from £400k to a £350k house......we'd really need to drop to £300 to make a difference, and there aint many 5 bedrooms houses near here for that money. Besides which.....we love our house............more than our son????

b) Selective Private school: from our research, yes some private schools are selective. We have however spoken to both the local private schools and been totally upfront about the issues our son is facing and both have agreed to accept him (yes they really do want our money!).

c) Private educator: 967stuart, not sure what you mean by this term............do you mean private tutor (see below), or private educational psychologist?

d) Private Tutor: since Christmas (3wks) our son has been receiving weekly one hour private tutoring. So far he is enjoying it, and getting one hours extra homework a week from the tutor. Its too early to say if this is effective by itself.

e) chivers1977: not sure you read the figures correctly. On our own, we need to find £10k pa....which we can't afford. But if we remortgaged MIL house then we would need to pay the £2500 interest payments....which we can afford (capital to be repaid at later date).

f) Private vs State schooling: we are just trying to do the best for our Son. I went to state school and came out OK (but with poor confidence). My wife went to private school and came out OK (but also with poor confidence).............so there, just goes to prove my point! Seriously, my wife came out with good qualifications while many of her peer group who remained in the state sector did not. She grew up in an area where the state schools weren't particulary good.

Thankyou sillystudent for sharing your experience. My wife appreciated where you are coming from.

Does anyone know how easy it is to put a child up for adoption?

g_attrill

I would have thought £10k pa. is affordable on a £63k income, especially with just a £163k mortgage. Have you looked at your outgoings and whether you can cut back in other areas to afford it without borrowing?

edit: I re-read above and this was posted by somebody else. Basically £5k+ month coming in, £1k mortgage, £1k fees still leaves £3k left over?

ViolaLass

I have two thoughts:

1. I can't see that your wife would be allowed to borrow £50k with earnings of £13k or have I missed something there?

2. As someone who went to a state primary and private secondary, I would really question whether private schooling is needed for primary school. After all, all you need to learn in primary school is how to read, write and count. If your son is struggling with any or all of these, I would have thought that a tutor plus you reading/doing sums with him regularly would solve the problem. What does the tutor think?