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Original poster

150k - which would you do?

35 replies

Forya10 · Yesterday 20:11

I owe 270k on a 550k valued house. I am due to remortgage in a year at which point I will owe 260k. I’m 38 and single and likely to remain that way.

I have saved 150k to put my child through private school from age 6. I wouldn’t want them to start later as I am keen for them to go into that intake. I am hoping people won’t derail the thread and make this about private v state!

Would you keep the 150k (earning around 12k a year interest at the moment) and slowly use it towards school fees or would you pay the lump sum off the mortgage and begin saving again at that point/paying for fees from income as savings (hopefully) build up?

I doubt I will get a better rate than 4.5% when I re mortgage.

OP posts:
cestlavielife · Yesterday 20:12

You cannot easily access money tied up in a house. Keep it separate.

Original poster
Forya10 · Yesterday 20:13

cestlavielife · Yesterday 20:12

You cannot easily access money tied up in a house. Keep it separate.

@cestlavielife mentally I want it paid off but it does feel daunting to start again with around 3k which is all I would have

OP posts:
Hollowvoice · Yesterday 20:14

How much are you saving per month and how much of the annual fees would be covered by the 12k interest you are currently earning?

Lyra25 · Yesterday 20:15

Can you afford to pay fees out of income if you pay down the mortgage?
I would be tempted to pay down the mortgage
how old is your child now?

Nimblethimble · Yesterday 20:15

Where is it currently invested? £12k seems a great return.

custardlover · Yesterday 20:17

12k is a fantastic return and will likely pay 1/3 to half of your annual fees which would mean at the end of the school life you’d still have a lump sum to put down on the mortgage.

Octavia64 · Yesterday 20:17

Is it a flexible mortgage?

ie can you get it back out as and when you need it?

Original poster
Forya10 · Yesterday 20:17

Nimblethimble · Yesterday 20:15

Where is it currently invested? £12k seems a great return.

@Nimblethimble some premium bonds, some investment account and the rest isas

OP posts:
Original poster
Forya10 · Yesterday 20:18

Octavia64 · Yesterday 20:17

Is it a flexible mortgage?

ie can you get it back out as and when you need it?

@Octavia64 I’ve never heard of those?!

OP posts:
Original poster
Forya10 · Yesterday 20:19

Lyra25 · Yesterday 20:15

Can you afford to pay fees out of income if you pay down the mortgage?
I would be tempted to pay down the mortgage
how old is your child now?

@Lyra25 yes but it would be v tight. After paying fees I would have around 3k a month for everything including mortgage payment of around 900

OP posts:
BeardOToots · Yesterday 20:20

Forya10 · Yesterday 20:18

@Octavia64 I’ve never heard of those?!

Show quote history

Coventry does an Offset Mortgage. Currently around 4.75%. Mine has been very handy!

Lyra25 · Yesterday 20:20

Forya10 · Yesterday 20:19

@Lyra25 yes but it would be v tight. After paying fees I would have around 3k a month for everything including mortgage payment of around 900

Edited
Show quote history

That is tough and I guess the school will require extra expense, uniform, trips etc
how old is your child? Do you have time to save again?

Original poster
Forya10 · Yesterday 20:21

BeardOToots · Yesterday 20:20

Coventry does an Offset Mortgage. Currently around 4.75%. Mine has been very handy!

Show quote history

@BeardOToots thank you. What does it actually mean? I could overpay a lump sum after taking the mortgage out and then take it back whenever I needed it?

OP posts:
JayJayj · Yesterday 20:22

I wouldn’t put all your savings into your house.

You need to make sure you have at least 6 months worth of savings. If you want to add any after that maybe.

Original poster
Forya10 · Yesterday 20:22

Lyra25 · Yesterday 20:20

That is tough and I guess the school will require extra expense, uniform, trips etc
how old is your child? Do you have time to save again?

Show quote history

@Lyra25 i think my family would sort uniform and things like that and I do have around 3k a year from family too. I could probably save around 15k before they start.

OP posts:
Lyra25 · Yesterday 20:26

Ooh I’m not sure could you do some and some? Keep some back for emergencies etc?

Icecreamisthebest · Yesterday 20:31

I’d put half the amount on my mortgage and continue to pay the same monthly amount off it. This should mean you are overpaying your mortgage by quite a lot. Continue to save separately and then if you need to, you can reduce your monthly payment on the mortgage down the track.

SlightlyTerrifiedButPolite · Yesterday 20:32

I would keep in premium bonds the amount you need to pay for her education in total. Figure out what you want to keep on top of that as a rainy day fund and then pay off part of the mortgage with the remainder

Oilburnadvice · Yesterday 20:35

Imagine paying mortgage then something goes off plan and you have to tell DS to love schools?

Id keep that invested and use to pay school fees. Try and overpay mortgage a little each month

winter8090 · Yesterday 20:38

Forya10 · Yesterday 20:19

@Lyra25 yes but it would be v tight. After paying fees I would have around 3k a month for everything including mortgage payment of around 900

Edited
Show quote history

I assume the 900 is if you use the money to pay down your mortgage.

How does the budget currently look?

How secure is your employment/ income?

I think I would work out how much I need invested to see the child through school. If 150k is too much then I’d pay the excess to the mortgage. If it’s not enough how much needs to come out of the monthly budget to top up the pot? Then the school fees are taken care of.

I would then focus your surplus income on paying down the mortgage.

rivalsbinge · Yesterday 20:41

I’d always keep the capital free, and that’s a good return. How long do you have left on the mortgage?

TheGoodOnesAreAllGone · Yesterday 20:44

Well you're making an 8% return on the money at the moment so it makes no sense to use it to pay off a mortgage that will cost you 4.5%
The 12k return and 3k from family must cover a large amount of the fees so you would still have a decent lump sum left once your child has finished school

nutbrownhare15 · Yesterday 20:47

You are getting a much better rate of return on the money than the mortgage rate. So keep the money where it is and pay the minimum payment on the mortgage. It's so tempting to pay off the mortgage and that's what we did for years but I now realise if you can get a better rate of return elsewhere that's where the money should be.

ilbehonest · Yesterday 20:48

sorry this is not the point of the thread but can I ask what job you do how much you earn after tax?

I just find it fascinating when people live such a different life lol.

honest questions too. genuinely curious.

MooseMuff · Yesterday 20:58

Nimblethimble · Yesterday 20:15

Where is it currently invested? £12k seems a great return.

Thats what I was thinking!!!! @Forya10