AIBU to sell an investment property to pay for children's school fees

[1WildFlower]

Help, not sure what's the best thing to do. I'm a single mum with 2 children at a private school, both are happy and doing well. They have 2.5 years of school left. I am managing to pay school fees each month but it's always stressful. I have an investment property that I could sell that would then cover the fees until they finish. I am so tempted to do this to end the continued stress. I always knew it would be a stretch as a single mum to send them both to a private school, any advice?

Either rent it out or remortgage. Speak to a financial advisor.

Whatever makes your life easier OP- without the figures it’s hard to advise but it’s not a crazy idea if it would ease your mind

Will it sell? How easily? Do you need the income from it?

Have you spoken to the schools bursar, maybe you might be entitled to some sort of bursary?

How are you managing the property atm? This is key to what you do now.

It depends what you have left after. It’ll buy you relief for a while but then they go to university etc so can you manage the future after school fees are done?

Hi, thanks for the replies. Mortgaging the property is an option as there is no mortgage on it, it's currently rented out to a good tenant who's has been renting the property for 7 years, the property is abroad so not sure how possible it will be to get a mortgage but hopefully a long term rental lease will help. I'll get some financial advice regarding this.

I am managing the fees but it's constantly on my mind, this will just help take some stress off without worrying each month. I'm in Scotland so uni fees should not be exorbitant and won't be anything near what I pay monthly for school fees.

I would never, ever sell. Get a mortgage and take out some equity to cover the fees. Definitely consult a mortgage company and a financial advisor.
If you sell you will be hammered with Capital Gains Tax before you get any money.

Juat sell it

Hi OP. If you do decide to sell, you need a plan about what to do with the proceeds. Cash in bank as a holding position could be a disaster when inflation starts ramping up. Which it will, as this is the most obvious way for the government to start clearing the enormous debt the country is now saddled with. Everyone with liquid savings will find that their money loses value.

...that’s a good idea from ChestnutSquash.

If you are managing the fees even stressfully I don't understand why you would sell an investment property.

May I ask what your pension arrangements look like? Can you downsize your present home? Take a loan to spread the fee pain?

If you have a rental property that you own outright, you are sitting on your own personal bank.
Make sure you find an advisor with experience in overseas properties.
I can't emphasise enough that selling this asset would be the worst possible thing you could do.

Absolutely do not sell. There is no saving acct at the moment that will give you as much return as a property plus you ll end up capital gain tax and since the property is abroad you might be hammered there as well as you are a non resident.

Try to get a mortgage to release some equities. If they only have 2,5 years left though, i d be inclined to carry on as you are doing now and power through.

Take the advice of a financial advisor who knows both the tax system in your country of your main residence and in the country where the property is.

I know what i m talking as we are dual residents currently tax wise 😉

OP, you have an asset, i.e. something that is going to generate a consistent future cash flow. All else being equal, you shouldn't be extinguishing that to meet a once-off expense. Remortgage if necessary. Interest rates are low and likely to stay that way. Depending where the property is/what it is, not sure if this is a strong market to be selling into.

Selling will be a short term solution, don’t do it. Refinance and get a small mortgage. The income will continue to support dc into university and and extra when you retire. Covid has really highlighted how important it is to have multiple sources of income, even more so if you’re a single parent!

@Exmlm

Have you spoken to the schools bursar, maybe you might be entitled to some sort of bursary?

Somebody has a spare house knocking around (and the rental income) and you're suggesting they ask if somebody could pay their school fees for them to help out a bit?

Really?

*

On an investment angle, I'd say keep hold of it - if it came down to not being able to pay the fees, it would be better to take out a loan with the property as security than it would be to sell it, as it's currently providing an ongoing income and the OP could arrange repayment terms that are less/over a longer period than the remaining fees. OK, that would then eat into any financial help paid whilst at University, but the DC could do something about that as they'll be old enough to work as well as study, whereas they can't exactly go out and help pay their own school fees.

Thank you so much for your advice, I will look into options of mortgaging the property or getting a loan against it, 2.5 years left of stress which I knew it would be as a single mum. It will be a short term relief if I sell. Thank you for your help.

We've just increased our mortgage on London rental investment for exactly the same reason OP. V stress free process and huge weight lifted off our shoulders, and we still have the flat. Don't sell!!

2.5 years is nothing
Get a 10 year mortgage

Thanks @unchienandalusia! Would be a big help for me.