School fees payments may start at an affordable level, but often the ability to sustain these fees from income becomes difficult to maintain when additional children start school and perhaps only one parent’s income is being utilised.
Using equity from property, in the form of a mortgage, is an effective way to overcome this and provides a loan for school fees. Even when it is possible to pay school fees directly, a long-term school fees plan is likely to be more tax efficient and can help maintain the parents’ standard of living.
SFIA offer a mortgage service to help clients obtain the best loan for their given circumstances. Mortgages may be residential or commercial in the form of buy to let. They may also be specifically designed for older borrowers, enabling grandparents to help fund school fees if necessary. SFIA are independent financial advisers and can choose mortgage products from all lending sources. Some of our self-employed, business owners and oversees clients can find it difficult to secure a mortgage directly, having criteria which falls outside the norm. We have a lot of experience helping people in these circumstances and are able to secure competitive rates for their situation.
Mortgages can be structured in a variety of ways; interest-only or split repayment enables more flexibility when it comes to budgeting for school fees planning. In addition, offset mortgages have the option to draw funds as and when required, resulting in minimizing the interest paid on the loan. Current mortgage rates can be as low as 1.25% depending on circumstance. When parents engage with the school fees planning process the mortgage is not utilised in isolation and may be integrated with other savings plans and investments. In this way parents can benefit from additional growth on their investments and take advantage of any tax relief applicable.
Creating a school fees fund at the commencement of private education is reassuring to our clients. It can create a smoothing effect for fee payments when earnings may be ad hoc and/or capital sums become available in the future.
SFIA integrate mortgage plans with a range of other services. Our aim is to fully understand our clients’ future aspirations and objectives and provide a long-term financial strategy to achieve this.