WWYD - taking 25% tax free lump sum earlier than originally planned to pay school fees...

Marcon

DRS1 said:

Marcon said:

DRS1 said:

You couldn't find a cheaper/closer school?

Why are you buying property 3?

Is the school a boarding school?  I am sure some people could tell by the level of the fees if they are boarders or day pupils.

If they are day pupils and you need to be closer to them why not rent somewhere if it is only for 2 or 3 years?

They are clearly day pupils - otherwise travel distance wouldn't be an issue: 'buying property 3 near our kids' school (too far to commute from property 1)'.

The fees quoted are going to be a 'top up' to other available parental funds - they wouldn't cover 3 children at private schools.

I am (fortunately) unfamiliar with the cost of private schools these days but what is the additional cost of making the children boarders instead of day pupils?  If they boarded then commuting would only come into it about 6 times a year (Oh and maybe half term so 12 times).  No need for property 3 at all then.

After all if the OP wants them to have the full public school experience they really are not going to get it just being day pupils

Very few of the UK's public schools are full boarding, some offer some sort of boarding, others none at all - eg St Paul's and Merchant Taylors' are both public schools which don't offer boarding - but there's no evidence that's what OP wants. They just seem keen to avoid the state system!

But as with all these 'what would you do...' posts, most of the important personal information is (happily) missing. 'Why would you enrol 3 children at a day school which isn't within commuting distance?' would be top of my list. Doubtless the family had their reasons, but they seem to have ended up in a right pickle as a result.

phlebas192

What I would certainly not do is rob my future to pay for today's expenses. You say you want to retire in just 5 years so how are you going to rebuild your not exactly large pensions in that time when you are clearly living well beyond your means? Is there some hope of being able to downsize and use released equity to pay for your retirement? Can you sell your business for a sufficient amount? Neither of these can be relied upon and a serious downturn in the economy could render both non-starters - and if this happened you might not even be able to rely on earning anything from your business.

You appear to have significant equity in property you don't want to currently live in. Why not sell?

Bottom line for me is that I would adjust my expenditure to live within my income. If that means hard decisions, then so be it.

tanoshii

Marcon said:

tanoshii said:

Me: 53, 50% share in Ltd company, on track for full state pension, DC pension 120k

Hubby: 56, 50% share in Ltd company, already has required years for full state pension, DC pension 160k, DB pension approx. 15k per annum from aged 65.

Assets: no mortgage on property 1, approx. £1million; no mortgage on "property 2", (located in the same parcel of land, but with separate utilities and separate road access, as property 1), approx. £500k as is if split. Property 1 is our permanent home, for various reasons (including the need for planning permission) we can't or don't want to rent out property 2 for +5 years. 

Situation: buying property 3 near our kids' school (too far to commute from property 1) worth £350k with all our savings and a £100k mortgage (existing offset flexible mtge on property 1)  - 5% interest only, 10 years left, double council tax.  Aim to live there term time and Airbnb it at weekends/holidays with the hope we eventually pay business rates after 12 months and can cover our costs.

With the above purchase we have no money left for school fees. We need 30k for year 1, 40k for year 2, 15-20k for year 3. Thereafter both children will be in state sixth form college near property 1. In terms of income, it can be variable, but we have never not managed to cover our costs. In a bad month we might have £1k disposable income, in a good month £12k.

Would we be mad to take hubby's 25% tax free lump sum now and mine when I reach 55 to pay for school fees? We have an additional option to borrow 200k on the existing flexible mortgage to cover the shortfall. In +5 years, we would look to split properties 1 and 2, sell property 1 and move into property 2. If we can't split, we might get £1.2 - 1.3 million on the sale of both, and of course have the option to sell/rent out property 3 after +3 years. We actively wish to downsize (property 1 is 7 bedrooms, 4 bathrooms, 5 receptions!) I can't decide whether the whole idea is too risky, given that we want to retire when hubby gets to 60 and that our income can be so variable month to month... Unfortunately, it is not an option to put the children in state schools now.  

It's always an option - just not one you want to accept (along with very many other parents who are struggling with school fees). 

Asking what other people would do is rarely productive, since other people aren't in exactly the same situation as you and don't have exactly the same views, priorities etc. A straw poll of random people on a website isn't going to give you anything other than a random result - and certainly isn't going to give you a firm basis on which to take your own decisions.

I completely sympathise with your situation, but that's not exactly helpful! The unpalatable reality may be that you quite simply can't afford to do what you are planning. Back in 2019 you were earmarking those 25% lump sums for university costs: https://forums.moneysavingexpert.com/discussion/5983819/using-25-tax-free-pension-lump-sum-to-fund-kids-university-education#latest

Maybe get some proper professional advice, based on a full understanding of your circumstances and attitudes, as opposed to comments chipped in on the basis of a few paragraphs? 

Yes - back in 2019 I was fretting about University costs - that idea is out the window now! Our circumstances have changed quite a bit since those days. At least we took the advice from posters to put more into our pensions...We could have done more so I guess, but then we ended up prioritising holidays instead and on reflection I'm glad we did, as we have had some wonderful experiences in Europe and further afield with them. We also didn't expect to choose private school from year 7 for our kids, so we've been lucky to have funded a few years already out of income/savings whilst also paying the mortgage off early and doing building projects at home.

Anyway, thanks for taking the time to reply. I realise it was probably futile posting initially, but it is helping to get a handle on what we're planning to do.. 

tanoshii

Bluebell1000 said:

Is there an option to rent a property nearer the school, so that you have cash to cover school fees and pay the rental without touching your pension?

Unfortunately, rental properties are in high demand (lots of landlords selling up) and rents are >£2000 per month, which seems expensive when we only want the property for term time..

tanoshii

DRS1 said:

You couldn't find a cheaper/closer school?

Why are you buying property 3?

Is the school a boarding school?  I am sure some people could tell by the level of the fees if they are boarders or day pupils.

If they are day pupils and you need to be closer to them why not rent somewhere if it is only for 2 or 3 years?

The local private school (where they have been since year 7) is not great (behaviour wise and academically) and expensive, whilst the local state is in Special Measures and experiencing lots of issues. Our kids went to a state primary which was ok (though requires improvement) and we had intended for them to go to the state comprehensive, but decided against it at the last minute when we heard horror stories from neighbours.

The private school further away (1.5 hours away) is a day school, cheaper and significantly more academic than their current private. I have looked into renting but there is not much supply unfortunately and it would feel like we'd be throwing money away compared to buying and doing holiday letting to cover our costs. 

tanoshii

Albermarle said:

DRS1 said:

Marcon said:

DRS1 said:

You couldn't find a cheaper/closer school?

Why are you buying property 3?

Is the school a boarding school?  I am sure some people could tell by the level of the fees if they are boarders or day pupils.

If they are day pupils and you need to be closer to them why not rent somewhere if it is only for 2 or 3 years?

They are clearly day pupils - otherwise travel distance wouldn't be an issue: 'buying property 3 near our kids' school (too far to commute from property 1)'.

The fees quoted are going to be a 'top up' to other available parental funds - they wouldn't cover 3 children at private schools.

I am (fortunately) unfamiliar with the cost of private schools these days but what is the additional cost of making the children boarders instead of day pupils?  If they boarded then commuting would only come into it about 6 times a year (Oh and maybe half term so 12 times).  No need for property 3 at all then.

After all if the OP wants them to have the full public school experience they really are not going to get it just being day pupils

I just checked at a local posh private school .

Normal fees are nearly £10K per term.
Full boarding would cost another £5K
Sunday to Thursday about £2.5K ( per term) 

Current private school is approx. £9.5k a term vs. new school at £6.3 a term per child. We have two children, and some funds set aside for the first year and other miscellaneous costs. 
We definitely don't want them to board or have a public school experience. Ideally, they would have gone to a good state comprehensive. My husband and I both went to terrible state comps and had a miserable time of it. At the end of the day, we didn't want that for our kids. When we bought our current house, the local state comprehensive was rated good, but is now in special measures. We really don't want to sell up and move as we love our house and rural location. 

DRS1

Marcon said:

DRS1 said:

Marcon said:

DRS1 said:

You couldn't find a cheaper/closer school?

Why are you buying property 3?

Is the school a boarding school?  I am sure some people could tell by the level of the fees if they are boarders or day pupils.

If they are day pupils and you need to be closer to them why not rent somewhere if it is only for 2 or 3 years?

They are clearly day pupils - otherwise travel distance wouldn't be an issue: 'buying property 3 near our kids' school (too far to commute from property 1)'.

The fees quoted are going to be a 'top up' to other available parental funds - they wouldn't cover 3 children at private schools.

I am (fortunately) unfamiliar with the cost of private schools these days but what is the additional cost of making the children boarders instead of day pupils?  If they boarded then commuting would only come into it about 6 times a year (Oh and maybe half term so 12 times).  No need for property 3 at all then.

After all if the OP wants them to have the full public school experience they really are not going to get it just being day pupils

Very few of the UK's public schools are full boarding, some offer some sort of boarding, others none at all - eg St Paul's and Merchant Taylors' are both public schools which don't offer boarding - but there's no evidence that's what OP wants. They just seem keen to avoid the state system!

But as with all these 'what would you do...' posts, most of the important personal information is (happily) missing. 'Why would you enrol 3 children at a day school which isn't within commuting distance?' would be top of my list. Doubtless the family had their reasons, but they seem to have ended up in a right pickle as a result.

Yes my school was a day pupils only school - then again it was also in London and only 40 minutes away on the bus so my parents did not need to move.  There is of course absolutely nothing wrong with the OP wanting the best possible education for their children and hopefully when they read this thread they will see people are trying to suggest ways they might achieve that without going overboard financially.

tanoshii

Marcon said:

DRS1 said:

Marcon said:

DRS1 said:

You couldn't find a cheaper/closer school?

Why are you buying property 3?

Is the school a boarding school?  I am sure some people could tell by the level of the fees if they are boarders or day pupils.

If they are day pupils and you need to be closer to them why not rent somewhere if it is only for 2 or 3 years?

They are clearly day pupils - otherwise travel distance wouldn't be an issue: 'buying property 3 near our kids' school (too far to commute from property 1)'.

The fees quoted are going to be a 'top up' to other available parental funds - they wouldn't cover 3 children at private schools.

I am (fortunately) unfamiliar with the cost of private schools these days but what is the additional cost of making the children boarders instead of day pupils?  If they boarded then commuting would only come into it about 6 times a year (Oh and maybe half term so 12 times).  No need for property 3 at all then.

After all if the OP wants them to have the full public school experience they really are not going to get it just being day pupils

Very few of the UK's public schools are full boarding, some offer some sort of boarding, others none at all - eg St Paul's and Merchant Taylors' are both public schools which don't offer boarding - but there's no evidence that's what OP wants. They just seem keen to avoid the state system!

But as with all these 'what would you do...' posts, most of the important personal information is (happily) missing. 'Why would you enrol 3 children at a day school which isn't within commuting distance?' would be top of my list. Doubtless the family had their reasons, but they seem to have ended up in a right pickle as a result.

Yep - a "right pickle"...It's frankly a mess.  We live rurally and only have one state option, currently in Special Measures. Our nieces and nephews went to outstanding comprehensives, three in London and two to Grammars. One of my children did get into a super selective Grammar (with no catchment) but it was too late to apply for the other child unfortunately - we have two kids. My husband and I attended dreadful schools, and we didn't want to risk our children having the same experience. At the time we bought our house, the local comp was rated good. For various reasons, its impractical for us to sell up and move permanently to an area with good state schools now... Luckily, the nearest sixth form college is very good.  

DRS1

tanoshii said:

DRS1 said:

You couldn't find a cheaper/closer school?

Why are you buying property 3?

Is the school a boarding school?  I am sure some people could tell by the level of the fees if they are boarders or day pupils.

If they are day pupils and you need to be closer to them why not rent somewhere if it is only for 2 or 3 years?

The local private school (where they have been since year 7) is not great (behaviour wise and academically) and expensive, whilst the local state is in Special Measures and experiencing lots of issues. Our kids went to a state primary which was ok (though requires improvement) and we had intended for them to go to the state comprehensive, but decided against it at the last minute when we heard horror stories from neighbours.

The private school further away (1.5 hours away) is a day school, cheaper and significantly more academic than their current private. I have looked into renting but there is not much supply unfortunately and it would feel like we'd be throwing money away compared to buying and doing holiday letting to cover our costs. 

All makes sense.  Is that an hour and a half there and back or each way?  6 hours a day travelling would certainly take it out of you if you are driving them there and back.  Presumably you can't get a job in or near the school to save on some of the trips?

Or does the school have a bus which could take them in and bring them back?

tanoshii

phlebas192 said:

What I would certainly not do is rob my future to pay for today's expenses. You say you want to retire in just 5 years so how are you going to rebuild your not exactly large pensions in that time when you are clearly living well beyond your means? Is there some hope of being able to downsize and use released equity to pay for your retirement? Can you sell your business for a sufficient amount? Neither of these can be relied upon and a serious downturn in the economy could render both non-starters - and if this happened you might not even be able to rely on earning anything from your business.

You appear to have significant equity in property you don't want to currently live in. Why not sell?

Bottom line for me is that I would adjust my expenditure to live within my income. If that means hard decisions, then so be it.

Thanks for your reply.
Yes - I agree with you in that it doesn't feel great to be robbing our future to pay for today's expenses. We will definitely be downsizing once the younger child has finished their education in order to release equity. We have no other choice but to do this to fund our retirement. I also hate the fact we will be so overweight residential UK property.
The plan is to try to split property 2 from property 1, live in property 2 for three years and then move elsewhere. Both properties have over one acre each, so with an extension, we could potentially increase the value of property 2 by quite a bit (3 bed to 5 bed).
We don't want to sell now, as a) we absolutely love where we live and its all the children have known, and b) we want to split property 2 from property 1 which will take some time.  The risk is that we can't do the latter, and there is a downturn in the economy etc. We wouldn't realise much from selling our business.