School fees - mortgage

Mrtumble

We are planning to put our children through private school.

Child 1 from 2015 for 7 years - at least £80k
Child 2 from 2018 for 7 years - at least £80k.

We will partly fund this from income (joint income of £75k pa at present) but will need to borrow to fund the rest of it.

We live in a house valued at £400k but only owe £100k on it.

One suggestion is that we remortgage to an offset mortgage where we would draw down school fees as and when they were needed.

Has anyone had any experience of this mechanism for funding school fees? Can anyone recommend a product or lender who knows how to handle this sort of situation well?

And does anyone know where I can buy cheap tinned beans?

Thrugelmir

Questionable whether a mainstream lender would release equity for such a purpose. Which is your major hurdle not an offset mortgage product.

shortchanged_2

No decent state schools in your vicinity?

Mrtumble

shortchanged wrote: »

No decent state schools in your vicinity?

They are pretty average, we're not very confident in them. Poor ofsteds and feedback from other parents puts us off

Mrtumble

Thrugelmir wrote: »

Questionable whether a mainstream lender would release equity for such a purpose. Which is your major hurdle not an offset mortgage product.

Thanks, I guess the lending market isn't what it used to be. Maybe that's a good thing.

Thrugelmir

Mrtumble wrote: »

Thanks, I guess the lending market isn't what it used to be. Maybe that's a good thing.

The nature of the lenders has changed. No longer are banks run by car salesmen but bankers again. (No disrepect intended to anyone in either profession). So property is no longer like an ATM. Where banks are falling over themselves to lend money at interest rates subsidised by the selling of PPI.

waveneygnome

I won't go into the pros/cons of private schooling........but I will say that I was against it, but her indoors had other ideas, and we have had a really positive experience.

We did something pretty similar to what you are looking to do, with offset, in fact our figures are nearly identical.

We arranged this 4 yrs ago with First Direct, were open about what we wanted the extra money for, they did think about it for a bit, I spoke on the phone direct to the underwriter and stated our case, but like you we had 25%ltv. We reckoned our school fee funding gap was 4 yrs @ £12k = £48k

a) Is your £75k before or after tax?

b) Look at the cashflow:

years 1-3 = only 1 child = £12k pa.............you should be able to afford this from existing income, and given your low existing mortgage this is easily achievable.

years 4-7 = 2 children = 24k pa.......possible funding gap

years 7-10 = back down to only 1 child

c) If you are really serious about private schooling, take a big hard look at your spending. We have friends who earn £60k, have 1 child, and say they could never afford private ed. They go on 2 holidays a year drive 2 newish cars, eat out most weekends, have all the latest gadgets/tablets etc................they could easily cut back and save £12k pa.

d) We are now in year 5 of our 10yr journey and have only just had to start drawing on our extra school fee/offset facility we arranged. It has been far less painful than I imagined. The children don't suffer/go without, are really happy at school which feeds through to home life too.

e) For us it has been the best thing we have done for our children. Our oldest is not academic, but has really benefited from the smaller class sizes and general learning ethos of private schools.

f) I would guess that we are one of the 'poorest'.....(can you earn £75k and claim to be poor?)......parents at the school, but we are treated the same by both the school and other parents equally to some seriously wealthy people.

Think hard, dig deep, it has worked for us.

One last thought........for other readers who are not fortunate to earn £75k, most private schools offer bursaries (discounts off fees, typically 10-25%) and a few scholarships for talented children (discounts between 50%-100% off fees)..........it makes access to private schooling open to a wider level....don't be afraid to ask....private schools are quasi charities/quasi businesses they need revenue from all sources.

Senior_Paper_Monitor

Did one of these recently - only a small number of lenders who would consider it - and good case preparation/presentation was vital and underwriting tedious in the extreme (and that was pre-MMR, although I see nothing in MMR that should stop this sort of remortgage)

Jolinar

I would speak to the schools financial people, they will be able to put you in touch with companies that can help with the off setting.

iammumtoone

I have no advise to offer on the financial side of things but you urge you to consider the fact you just intend to put your children in private school for the first 7 years.

I would have loved my son to go to a private school he would thrive in such an environment so I have no issues with private schools v state. However I do feel if you are going down that route you need to do it for the whole of their schooling not just the primary school level. Only you know your children, you need to consider how they will cope with going from a private school to state secondary school! I do have friends who did this and the transition was not nice due to how the other kids (who all went to state primary schools) treated them.

Zoology_Dragon

iammumtoone wrote: »

I have no advise to offer on the financial side of things but you urge you to consider the fact you just intend to put your children in private school for the first 7 years.

I would have loved my son to go to a private school he would thrive in such an environment so I have no issues with private schools v state. However I do feel if you are going down that route you need to do it for the whole of their schooling not just the primary school level. Only you know your children, you need to consider how they will cope with going from a private school to state secondary school! I do have friends who did this and the transition was not nice due to how the other kids (who all went to state primary schools) treated them.

I assumed it was for secondary school, aged 11 to the end of sixth form is seven years.