to want to pay off the mortgage instead?

[onnwt]

I was gifted 100k last year. Dd is due to start school in a year. My parents (who gifted the money) are ‘very sad’ I’ve decided to use the money to pay off half the remaining mortgage instead of towards school fees.

They said they assumed I would keep the money until she started secondary (and presumably add to it between now and then) or I would use 10k a year from the 100k and spend my own income on the rest of the fees per year if she was to start age 5. They’ve said I can do what I want with it but they ‘assumed I wanted dd to have the best opportunity in life.’

My outstanding mortgage is 208k. I would love to pay it off to under 100k as I would then realistically be mortgage free by 45 (I’m 32). I’m now second guessing myself as I do have a healthy income and could feasibly just pay the fees from income alone. I wanted to enjoy life though. For context state schools round here aren’t they best but aren’t the worst either. I’m now feeling like a shit mum and also even worse as DS’s dad has zero interest so this decision totally rests on me. WWYD?

Mortgage every time- building equity buys your daughter security. If you find yourself unable to work in the future you can sell up and buy something small in a cheaper area. I know several privately schooled people who have had 10s of thousands spent on their education, only to do minimum wage or similar jobs. I know lots of people who went to state schools and now have very successful careers. Where you go to school doesn't guarantee anything in terms of career prospects, but £100k extra equity will hopefully guarantee some financial security. Your parents are being unreasonable to give you hassle too- you don't give a gift freely if you want tot dictate how it's used.

Why don't they just offer to pay school fees rather than gift the money?!

Housing security also helps your DD. I would pay off the mortgage and maybe look at private school for secondary if you are in a good position to pay for it then. I wouldn't send her for primary unless there's a big need for it. It's a long time until she gets to secondary and you don't know what the situation will be like then in terms of schools or your own finances.

Then why didn’t they keep the money until the DC was year 5 and then say I’ll pay school fees or stipulate that it’s solely for school fees?

Around here, you will pay £30k+ for secondary, £15-20k for prep. That is right now. Plus annual inflation. Soon there will be VAT.

OP's child isn't even in reception yet. That is what I am am on about. What about you?

It is very possible to do extremely well academically and in life generally going to state school. I went to a less than great state secondary school, have a PhD, am a qualified lawyer and all unis I attended were RG ones. You don’t need private school and 93% of the country manage without it. We have a PM who was not privately educated. Spend it on getting mortgage free.

So they gave you money, and are now saying it’s for x… or they said we would like to pay for dd to go to private school - here’s money to pay…. They shouldn’t dictate well after the gift is given of they didn’t say so initially

Very weird they gave you the money but didn't say it was for a specific purposes. If you pay off your mortgage now, surely you can then save up during primary school and pay for private secondary if that seems a good option at that point? It might not be right for your kid, you can't predict that now.

Why are people discussing the merits of paying off the mortgage against private education?

If the grandparents gave her the money without any stipulations then the OP can use it on drink & drugs if thats what she fancies.

The issue is the GP gifting money to the OP with or without stipulations or at least a very clear conversation.

Seeing as you earn a good salary, why don't you use £50K to pay off mortgage now.

Put £50K in high interest isa, let it grow til DD about to start secondary, and use it for private school then?

Your mortgage payment will be less, you'll feel more secure in your housing and have a nice lump sum waiting for DD's education.

If the state school goes tits up it sounds like you have enough to pay to switch her to private anyway regardless?

I would 100% be doing your original plan OP. Then you will hopefully be in a position to help your DC through Uni /setting up as an adult plus afford some amazing life experiences together along the way.

Your parents error in not stipulating what is was for or indeed giving enough for all private fees.

I would put it all towards the mortgage, no question.

Nice problem to have though, generous and wealthy parents.

Could you say to your parents that you'll pay off the mortgage but put what you're saving on the mortgage into an isa that could potentially be used for private secondary school in future.

You don't know what your local secondary will be like in seven years, it could be great and then the money saved could be used to help DD at university or with a house deposit.

My DC are thriving in state schools so I'm very pleased we didn't stretch ourselves to pay for private.

The key question here is what did the parents say when they gifted the money. The op is strangely silent on this. There is no way this is a surprise. As such, it would appear she was gifted the money for her kid and used it for herself, as she said, so she can enjoy herself, even though the schools aren’t great. Hence why she feels shit.

Sound like your parents are trying to control you OP and your daughter. I would pay off the Mortage then say that you are using that more to save towards school fees. Surely that is much more tax efficient

@Mochipuff

Put £50K in high interest isa, let it grow til DD about to start secondary, and use it for private school then?

Wait, is the isa limit £50k now, I thought it was £20k

Do you want to send her to private school?

Assuming you do, and you only want to send her from secondary level, your wisest move is to pay down the mortgage, and simultaneously start saving into a high interest rate account.

£100,000k off your mortgage on a 10 year fix at 5% could well save you compound interest of £30,000

So I would reduce my mortgage and use the savings to put into long term savings for school fees.

You’ll save way more on mortgage compound interest if you pay down the mortage.

No doubt in my mind - chuck it at the mortgage. You’ll save a fortune in interest.

Private school at primary age is silly.

Use it to pay off half the mortgage and then pay what you are saving into an investment account for DD.

Pay off the mortgage early - it will give your family so many options. Don't waste the 100k on private school. If I had paid for my children's education I would be so resentful, when you can have it for free!

I think it was unfair of them to give you the gift so you could use it for school fees, but not to actually tell you that. You’re not a mind reader. If they wanted to pay for school fees then that’s what they should have offered to do, so in that sense YANBU.

I do also think that being mortgage free by 45 is unnecessary though. Obviously it would be nice and but I wouldn’t personally prioritise it over other spending.

If they are otherwise reasonable people, have a conversation with them about it.

They may be assuming private school fees are still in line with what they were 25-35 years ago, when they may have paid it for you or looked into it. Or they may looked up the base fees without realising the extras needed on top, that they increase annually, that they increase by year of school, likelihood of VAT etc. (From someone whose child has just finished private school and not a moment too soon...)

Doing the sums and showing them that their gift will only pay for eg 2-3 years as a pp said may help to set things in context.

It also really depends on the child you have, the state schools and private schools available to you locally, and whether the difference is worth the cost. In our current area, private prep or state primary (if you can afford a house in the best catchment - £1m+) and state grammar is the best and most cost effective option. In my home area, it's state primary and private secondary (because the local primaries are great but secondaries are not). There's no one size fits all IMO.

Investing the money for your child's university (if they go) and/or towards a house deposit may be a better use of it. Or paying off your mortgage earlier to allow you to build up similar savings for them.