Is this a financial mistake? Help please

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I have a 2 year old and have recently been gifted 80k. If I paid off some of my mortgage with this I would owe 150k. I’m 35.

The schools round here are absolutely awful. I can’t move area as I need family support so I have to stay.

Yesterday I looked round a private school which is 20k a year including vat. Me and ex are on good terms and he pays 1,200 a month. He won’t pay school fees but has said he will increase monthly payments to 1,500 if I choose private.

What would you do? I don’t have a high income my take home is 2,400. I am worried for dd and feel a bit lost with what to do. Please help!

Just a few thoughts -

Pay the mortgage that will give you greater security which is priceless .

Try state schools and pay for tutors if needed ( you can move schools if not happy also ) .

Life has a habit of throwing us curveballs and security will help with that . It also gives you more choice .

The toughest costs we have faced has been uni so keep some back to help them with that ( we currently have to help at a cost of £500 a month towards uni living costs !) , pay a chunk of your mortgage and keep some emergency money .

Neither of my kids went to private school . I was a single mum ( no support at all) and both mine went to uni , in fact they say now they would have hated private school and are glad I didn't do it ( I never could have afforded it anyway )

Overall if it were me security would be key

I'd rather pay for a top-up tutor at secondary.

There's lots you can do to help at primary level.

And lots can change in schools from now to then - a change of HT can work wonders.

YABU, it’s not enough to cover private school fees with your current high mortage.

If you pay off a lump off your mortage right now you could probably save around £20k long term in compound interest.

Would doing that, frantically saving, then moving before secondary be a possibility? You should need less help with childcare by then. Or invest your £80k now to do that in 6-7 years time.

My DS went to a school that had dire results, he did exceptionally well. A woman I used to know sacrificed a lot to send her child to a private school, they also got all A grades. Roll on a few years and the last I heard the child now young adult is unemployed. DS is on a degree apprenticeship and doing really well. Concentrate on your child’s social skills, plus being an engaged parents is the best thing for kids.

I wouldn't do it. Invest it instead. With the VAT on fees you will struggle to keep up. Private schooling at primary age is a waste of money, not to mention all the additional, hidden costs.

I would invest it. It'll have grown hugely in 30-40 years, assuming you invest it wisely.

I agree with this a hundred percent.

You have to take into account if there are any penalties for paying off a chunk of the mortgage early, too.

I’d put £20k in a cash ISA now, another £20k in the new tax year. If you already have some savings then yes put the remaining £40 against the mortgage.

I would not invest a lump sum in an index tracker stocks and shares ISA, they work better drip feeding monthly and are long term investments (10/20 years plus).

My son went private until he was 10 and then did the 11 plus to get into the grammar school system. It was worth every penny.

I would invest it too. I'd put it into a market tracker fund of some sort, and move the max each year into an ISA. This assumes that you can comfortably afford your bills etc with your income.
This will probably grow more than if you paid down your mortgage and you have the security of it should life change
Don't tie yourself into private school. It's hard to untangle from. Get your child into the best local school. You can get a tutor /pay for activities. Reassess at 10 ahead of secondary
Life changes hugely in those years.

I always used the logic that I would put my children through private education if their father was in a stable, high paying job, like a Dr or suchlike. My exH was financially successful from a young age being self employed, but it was largely contract based and if those dried up, we could have been in a position to have to pull the children out of paid education and into the local schools, which are excellent here, but not a situation I wanted to put either child in from an emotional perspective. They went to our local schools and have both done exceptionally well, from A Levels, to Uni, and into jobs. They are as happy/content as one could be for this stage in their lives and have both just bought a property.

Great if you live in a grammar school area and have an academic child

This

Look on money saving expert website. Check mortgage overpayment calculator and see what you could save by paying into your mortgage (be careful to avoid fees might have tonwait until next time deal expire). There is also an option to compare overpaying mortgage to savings.

I moved to a grammar school area for that specific purpose. Depends on how strongly you feel about your child's education.

Pay it off the mortgage.
Then you have the choice when she is 10 to move to a better catchment for a good secondary school. Or have the money to pay for private tutors of grades are important. It's not enough money to pay for private school all the way through.

It’s not just the private school fees you have to consider. It’s the uniform costs, meals and the trips. Can you afford the ski trip? Are you comfortable with your child being the only one who doesn’t get to go because all of the other parents can afford these things?

I think you’d be resigning your child to a life of feeling like the odd one out amongst significantly more wealthy peers.

Are you going to have to pay tax on this money? Will it affect your child benefit?

No, it would be foolish. You can augment a mediocre school by doing extra work at home with the child, mostly as much reading as possible, but other educational/enrichment activities. At least until they are 10-12.

Do not squander a windfall on something like school fees that are gone when they are gone. Keep a bit for emergency and either funnel the money into your pension or pay down the mortgage. It would be worth spending a couple hundred for a one-time review with a fiduciary financial advisor (not a salesperson!) to look at the pros and cons of each option.

I think it’s always said that the best thing to do with a windfall is put a bit aside for a rainy day, and put the rest into your mortgage, because no savings will get you as much as your mortgage will be costing you. So I’d probably put £20k in a cash ISA now, possibly another £10k in another cash ISA in April, and use the rest to pay off some mortgage.
The absolute last thing I’d do is spend it on private primary school fees. However, if the local secondaries weren’t any good (and you really can’t move), I’d use this financial boost to start saving for private secondary when the time comes.

I'd pay £60k off and keep the rest as a buffer, unless you've already got good savings. Doesn't sound as though you can afford private education to be honest. You can help your daughter in other ways, especially spending time learning things, you could even have a private tutor if you felt she was struggling in an area.

Yes, that's what I'd do. Moving just a short distance away will affect your choice of schools. If you can't drive, then spend some of the money on lessons and a car.

This would be my suggestion

No, don't put it into the mortgage. Invest it in a stocks and shares ISA for the next 10+ years and average annual returns will be notably more than your mortgage interest rate. I made a 13pc return last year, which was an average, not a good year. 80k are protected per investment, so you can split it and open an ISA now and then another one in April and let both grow. The stocks and shares ISA's I know will also let you withdraw money should you have an emergency for example.