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?

hello!!! But you also said: 'you were planning on living a little'. Please pay school fees otherwise this will mark you out as unreliable.

I will say it again. Not round here they're not. That is prep school level. Secondary is £30k+. And OP's child is under 5. Now add VAT and however many years inflation.

Failing to understand that money is fungible is one of the biggest obstacles to financial literacy. It's on show in this thread in spades. OP can pay off 100k of her mortgage and then borrow it back later if needed.

Pay off your mortgage, get her a tutor for her weaker areas, pay for out of school clubs and put the rest in savings for her for a deposit when she’s older.

I know a lady who’s parents paid for all three of their daughters education. Two became SAHM and one became an eco-warrior.

Giving your child a leg up on the housing ladder will be the greatest gift you can give your child.

DS went to state school got mostly 9's at GCSE and is predicted Astars for A- level.
No way would I be wasting £100,000 on paying for a school. We also paid off our mortgage by 40 with a little bit of help from my parents and the feeling was amazing.

I'm 100% with your decision OP. I was a bit older than 45 when mortgage free but cannot overestimate how it feels.

State school is free. I'd pay your mortgage, it makes far more sense.

Question is - how many years of private school will 100k actually buy though? You could put it into the mortgage and re-mortgage when she's 11/12 to send her to a very good secondary.

As someone whose parents valued my education over everything else...YABU a little. My parents went to great lengths to give me the best education and I have benefitted hugely.

Nothing wrong with state schools but you say yourself the ones around you are not great. It's not just about the curriculum, it's about how good the other kids are, how much the teachers are pushing them, etc.

Put 20k in an S&S ISA and the rest in a GIA (also S&S) then move another £20k to the ISA next year, etc.

In 5 years' time the £100k might well be £200k - far, far above the gain from paying off the mortgage.

You'll still have the money there if you're wanting the security of something behind you, you won't have spent the money you were gifted and you still have the option to pay for private schooling.

Trouble with private school is the mixing with other children from wealthy families and how that will play out for her if she can't afford to fit in socially ( the clothes, concerts, holidays etc). Your house may be deemed naff. Your daughter may be happier with life at the local secondary school.

As a single parent in think security has to be your biggest priority. I wouldn’t entertain private school fees all the way through unless you were absolutely certain you could maintain it. Given what you’ve said about schools, I wouldn’t do it for primary but would run and numbers for secondary.

But, 100k probably wont touch the sides for secondary . Schools near me that were £20k a few years ago are going to be closer to £30k next year once vat is added. That is an absolutely massive increase. We’re in a massive dilemma as the local comp is crap but the privates are among the best in the country. A few years ago fees felt in reach, now were not so sure.

Why not tell them that you will be planning to spend it on school fees, but the best way to do that is to use it initially to pay off a big chunk of mortgage and save a lot of interest that you'd otherwise owe?

Even if you were 100% set on private education already, it wouldn't make sense to put it into a savings account for that while your mortgage interest is piling up year on year. You could also explain about how with only one earner you need to prioritise your home first but I'm not sure you need to - even without that it still makes sense to get rid of some of the mortgage now rather than save the 100k in somewhere else just for school fees. Either way I'd point out how you absolutely will be using their money to enable you to spend money on your daughter's education, it's just that you'll do it by paying off the mortgage thus freeing up more money each month - I wouldn't talk to them so much about reducing the term, more about the benefits of reducing the overall amount you'll have to repay.

Whether when your dd gets to 11 or 13 you still want to spend it on school fees will be another matter, and perhaps when she gets to that point you'll need to have another argument with them if they think she should have a private education and you don't. Worst-case unlikely scenario at that point is that you re-borrow the money and pay them back (with six years of interest on 100k saved) but realistically I suspect they'll be more than happy just to see you spending a serious amount of money on extra-curriculars, tutors, experiences and so on, and saving for good university support, if there isn't a private school nearby that's affordable and a good fit for her.

It's not enough for secondary school by any stretch.

You pay off the mortgage, save massively on interest and start saving up for private school and see where you are at in 5 years time then make a decision.

They are unreasonable to place the guilt burden on you.

Both parties should have made expectations clearer. Your parents have given you a large sum of money which they wished to be put towards your child's school fees. YABU. You should have made it clear you wouldn't not be doing this. It's really cheeky to use it to pay off your mortgage.

Wouldn’t you be wise to present the facts around mortgage interest vs saved interest to get them to see the impact on your overall position in paying it off?

Also are you sure you can overpay such a lump in one go?

What interest rate is your mortgage on? I would pay off the mortgage. She isn't going to secondary school for like 7 years!

You need to do some maths. Is interest rate on savings higher than mortgage? What about if take into account over a certain interest you pay tax on it? Pay off mortgage when advantageous to. Set up highest interest regular savers you can. Pay down your mortgage as much as possible as quick as possible. With the overpayments you could have paid off or really reduced mortgage to sub £50K by the time she's near secondary.

Then remortgage if you need to when she's starting secondary for a longer term if your wages can cover it then.

Our secondary school fees are £18K a term. I appreciate the VAT increase + yearly increases will change this, but £100K will still cover the bulk of it.

And my DD had a hideous time at her state school, as it had bloody awful behaviour & academic standards, and benefitted hugely from moving to a private school.

Which shows us that anecdotal evidence is largely useless in this situation.

OP - it will depend on the schools in your area and what your DC are like at secondary age. Which you can’t possibly know yet. I would speak to a financial adviser about investing it, and then at least you’ll have the private option in the future.

Just because you paid off half of the mortgage does not mean the money disappears. You can remortgage later on if you need to draw on it for private school fees or as another poster suggested put it into a offset mortgage which makes later withdrawal even easier.

Maybe you can explain that to your parents. It is not all or nothing.

I'm blown away by the people saying you should spend it on school fees. I've taught in private schools for over 20 years and would def pay the mortgage not the fees (never ever never for Primary certainly, possibly secondary if DC was struggling in some way).

The only naïve people on this thread are the people who think paying for education automatically makes it 'better'. It just isn't the case. You'd need to look closely at any school you pick, state or private.

@onnwt - you need to check the rules about overpaying your mortgage, if you haven't already. Some mortgages only allow a certain %age can be overpaid in any year, so do double check what the rules are for your mortgage.

Mortgage is much more sensible. Loads of people I was in private school with have low paid jobs, I think many of the parents got a lowsy return. Also bullying was rife. Your gut instinct on having financial security is in my view the right one.

It's a weird thing for your DP's to disapprove of Op, your DC's not even close to going to secondary school yet so why give you the money now. Life changes, things happen that will make a plan for 5 or 6 years time a nonsense, you could have to stop working, you could have another DC, you could move away somewhere 40 miles from your nearest private school. It's an awful lot of money Op but I'd feel uncomfortable in your place, it feels a bit like bribing you to do as they want you to, it's your DC, not theirs

Pay off the mortgage, boost your pension, send your child to the best state school you can and throw money at tuition, side activities and travel. Build a good secure base and a rich life together with your daughter. £100k won't really touch the sides of private education (About £17k - £20k per year for non London day schools, plus extras, which you'll need to buy so she can pitch in with her friends). And I sent mine to private school until sixth form, when state school supplemented by tuition did the job.

I'd be using it to pay down your mortgage. I'd feel no guilt with this, especially being a single parent.

You can pay for a private education but it does not guarantee the standard of life or career your child will end up in. I know people who have been to private school and they are all in low paid, not particularly great jobs. I know people who went to mediocre state schools and are high earners, like seriously high, talking earning well in excess of £250K/yr. My husband and I, both state educated, both have done well career wise.

By all means, pay your mortgage down, then if you happen to be able to afford private school as well with your income, do so, but I'd absolutely take financial security of your own home over private education.