Is this a financial mistake? Help please

If anything you should hold out and pay for a tutor to get her through 11 plus into grammar or some kind of bursary in private?
I honestly don't think a two year old requires private school. At primary it's really only for those who can easily, comfortably afford it. Even then I'd say it's not worth it especially. You'll end up overstretching yourself. And if she has to leave the private school prematurely due to financial issues that could be upsetting for her.

I inherited a large amount, and decided to clear the mortgage, leaving me a little afterwards. I'm so glad I did, I have paid it off 15 years early and it's turned out that due to illness with my DS I'm not able to work as much now, so having no mortgage has made it easier. My brother kept it and is enjoying the money, but I guess I've always been on the side of clearing my debts first. School may resolve itself in time, and in the future if you have less mortgage debt you may be able to afford a bigger mortgage if you are able to move later

If you have been perfectly fine making the mortgage payments without the random £80,000 then I would definitely not just put it into the mortgage no. Plus I would be aware of where the gift has come from - if the person who donated it died within the next 7 years you could be liable to pay some tax on it. I would definitely consider using your ISA limit, I put some in a stocks and shares account and it has a very good growth. I don't have to know anything about the best place to put it, because the account is dealt with for me, you can select your level of risk. It's good for money invested longer term. You could still put some money into the mortgage, do you have an overpayment limit? I wouldn't personally want to be penalised by going over that either. I would also consider putting a large sum into premium bonds, no growth on savings if you don't win much, but the potential is there for winning a million - you never know, and that would put you in a good place for private schools!

👍 If it’s free then that’s who I would consult it’s too much money not to do something sensible with

Many advisors offer a free initial consultation, which would at least give you some idea of the numbers involved

The sad thing is that OP's research appears to consist of asking Mumsnet for advice.

So many replies on this thread are advising paying down the mortgage without any clue of what rate that mortgage is or if there's any other debt. It's rubbish advice to give, as it's not informed.

Following the advice of those replies could be a very expensive mistake for the OP to make. The majority are not always right.

Only thing is you need to pay for financial advice which is expensive.
better researching yourself

Professional advise from a financial advisor is not incorrect advice.

So your mortgage currently is £230K? It's a big mortgage for a single parent, even with maintenance income. As others have said, what if his/your job changes, he gets a new partner and reduces payments (particularly if he's not onboard with private education),illness, etc. I'd want to pay that down asap and reduce the mortgage outgoings. You can then save the difference into a high interest account.

An independent school is far more likely to make a difference at secondary school age. Even better, move to a grammar school area if there is one nearby. Use some of the saved mortgage payments on enrichment; music lessons, encouraging sports, travel or tutoring.

Invest the money in tax free ISA's and/or high yield interest accounts - this will work out better than chipping away at the mortgage. Maybe look into private education for the 6th form if you still want to go down that route then.

You don’t need a private education. I paid for tutors for my daughter (only from secondary onwards) with me
supporting during primary with reading, writing and maths. She’s doing GCSE’s this year and predicted all 8’s and 9’s. It was much more affordable than a private education and left us more money for holidays and general savings which will hopefully help her when she needs a deposit for a house or uni support.

I would think about what the child might want when grown, I think some money towards uni or a house deposit would be of so much more value to them. And also the money will grow over the years in savings interest. Unless they really struggle with learning they will likely be absolutely fine in regular school.

Gently, It isn't just about the fees and VAT. It's the school uniform, books, school meals,, it's the sports kits, the after school clubs and the opportunities to go on trips the other thing is that VAT isnt going to go away. The current government is also hammering employers with employee NI. I had budgeted for a 10% increase in fees when my kid started private school (and i could only go from p7 as due to stupid financial decisions, i didn't have the right budget till them). I am now looking at a budget of 15% increase to fees year on year plus the VAT. If i get anything less than that as an increase, it is a bonus, anything more, well, it's beans and bread for me, not toast! You need to look at some serious budgeting (excel will be your friend) both now and forward planning to see if you can afford to do this because the last thing you want to do is rip your child out of a school she loves as you can't afford it. In addition you need to look at your own standard of living. What if mortgage rates go up, do you have other debt that needs to be serviced, how many years do you need to fund schooling for, can you still go on holiday or are you happy to sacrifice that for her education (no judgement here - our holidays are butlins and its not happening this year!). Also look at what happens if either you or dad loose your job or if dad can no longer afford to pay £1500 a month. If private education is what you want to do, then stick the £80k in a high interest account and use it to cover extras and shortfall. Also look at whether bursaries might be available- again labour have screwed this with the VAT as the amount of bursaries are reducing and only normally available for secondary education. Good luck with your decision making.

No offence to anyone here but you probably aren’t best served by asking Mumsnet for investment advice. Find yourself an independent financial advisor

Pay it into your mortgage for long term security.
there’s also the option of putting some into a junior isa for your dd, maturing when she’s 18, this means there’s money there for driving lessons, college or uni or to help her travel when she’s older.
you could also keep some money aside for extra tuition.

If you paid the £80k off your mortgage you would be around £500 a month better off, so start from there. OH is chipping £300 in, so all things considered you are £10k a year short.

If you can find that out of your outgoings, then go for it. If you can, then don't. If the schools are bad, hire a private tutor for £500 a month you are saving on your mortgage, and you're then getting the best of both.

In your position I wouldn't be considering private school.

I know you say you need family support but I'd be looking at schools slightly further away (with good wrap around care) with the view to move.

I think you need to re-read the OP. At no point does she say that this is her DC’s money.

As such your advice is incorrect.

Don't spend it on private school. Move to an area with better schools.

If you put the 80k in an MCSCI World Tracker Fund and it returned it's historic average 8% return, 50k invested today would be 180k when she is 18 (tax would reduce the compound on this so it would likely be less unless you find a tax efficient way to do it). But that would pay for university and pay for a house deposit for her.

reduce your mortgage, if you don't have accessible emergency savings, keep back maybe £10k for that.
Overpay the mortgage (or continue to pay at the same rate after paying off a chunk) As you'll have more equity, consider moving to an area with better state schools.

Pay down your mortgage; private school is not affordable or the better option.

You need to remember it’s not your money it’s your DC. you can invest it on their behalf but it needs to be in their name not yours. You need to get some professional advise from a financial advisor as they should be able to tell you what you can and can’t do. But it is NOT your money it’s your DC so you can’t pay off your mortgage. You are the trustee for your 2 year old DC money. You have a legal duty to look after it and invest it for them. If in years down the line they find out (which they should) that they were given £80k and you don’t have it to give to them you can be prosecuted. Be very careful!

Kindly, you can’t afford private school. Instead, set aside some money each year to ‘enhance’ the local school - tutoring, a music instrument/lessons, excursions out to interesting/educational things (as she gets older) and invest time in taking her to the library, reading to her and fostering a love of reading and books. This will set her up well for primary. THEN in 6 yrs time, you might make different decisions for secondary school - moving, scholarships, or going private for those years.

So, for the £80K money now, I would:

1. Set up an Emergency Fund. Calculate 3-6 months worth of bare-bones expenses, and put in a high interest savings account, not to be touched. The interest you earn each year should cover cost-of-living inflation, as things increase. As you are a single parent I would opt for the 6 months, not 3, as you have the responsibility of a daughter and no second income coming into the family, so things are a little more precarious.
2. Pay off any consumer debt - credit cards, your overdraft etc and close them(or cut your credit card limit back to £1000 or something small, if you must have one.
3. Keep between £1000-5000 in an account marked ‘holiday’ and plan a nice holiday for you and DD, perhaps not now, when she is too young to enjoy, but when she is a bit older. The amount here would depend on how much I had already paid into the first 2 categories. If you already had an Emergency Fund and no consumer debt, put the whole £5K. If you have already used a bit to fund the above, make it £1k or a preportion in between.
4. Rest of the money in the mortgage. This will help in many ways - bring down the time it takes to pay it off, eg - in 16 years time you may have paid it off and will have that extra money from your salary to help DD with uni costs. Or if it reduces to 10 years left, you’ll have it paid off by the time she is in secondary and can consider if you could pay for private fees with the extra money. Or even if it’s not for another 20 years until DD is 22, you could use the extra money to save for a house deposit for her. Or just enjoy the money yourself! Also, paying more off your mortgage now will help you remortgage later (between LTV) and could put you in a better position (more equity) to move in 10 years time if you need to for DD’s secondary school.

That’s what I would do in your shoes, and you can re-assess schooling in a few years time.

I would split it. 20k initial investment into a combo of all world and American tracker stock. 60k in an offset mortgage account. DCA the offset into the stocks tracker as you get more comfortable with it. Start with 1-2k a month then year 2 maybe 2-3k.

Get up an investment calculator. Have a look and you will be amazed at the power of compounding.

If you definitely want private then I’d wait for secondary and try to save a lot more in the next 8 years. If it’s £20k per year you only have enough for 4 years so you’d need to find another £20k from somewhere at least and that’s not allowing for extra like school trips, uniforms, etc.