Do we put everything into the house?

[Me2Me2]

We're buying a house with a 90% mortgage. It's going to cost us an arm and a leg but it's not like we'd do much better renting, plus property in London just goes up and up so waiting won't help.

We've been putting money aside for our kids (presently under 2) education for the past 2 years and will continue to do so in the hope we can send them private for secondary.

The question is do we put the kids' money into the house so we can get an 85% mortgage instead?

Or is it better to keep the education pot and house pot separate?
Since we started saving for the kids we've regarded the education pot sacred, not to be dipped into for anything. But if we plough it into the house now we'd be save £400 a month. And if we put the money we save monthly for them into the house too we'd bring the mortgage down further.
As I write this, it seems to make financial sense to put everything into the house, and to use equity from the house to pay for the kids' education later, but I like things clear-cut and am worried that, if the house is worth nothing in 10 years time, the kids' education money would still be there.

I'd really appreciate advice on this

If you save £400/month by having an 85% LTV mortgage plus what you normally put aside into the education pot, would you have enough saved by the time they reach secondary age to pay for the private education? Alternatively, could you relocate to an area within striking distance of London where the state schools are very high standard? I happen to live in an area like that - 20 mins from central London by train - and it seems to be a popular choice for families.

BTW... no house will be 'worth nothing' in 10 years' time if you make an intelligent choice and go for something that would appeal to other people as much as it does to you. There's a big shortage of accommodation in the SE and no sign of it letting up.

Have you looked into offset mortgages? However much you keep in your savings, you won't pay interest on that amount of your mortgage, so keeps the savings intact but helps you to repay the mortgage quicker. Excellent option if you are saving long term, especially as savings interest rates are so low at present.

It's almost always better to reduce debt rather than save in a bank account. Both because interest rates on debt are higher than interest, and also because there's tax on interest income.

The only reason to keep savings in cash is for emergencies. Once you've got that covered, it's best to reduce debt and then borrow back if and when you need the money.

We used the money we had put aside for the kids when we bought our house. Without it we couldn't have afforded this property. Use the money and reduce the mortgage debt.

I used money saved on behalf of DS for part of mortgage deposit...he's on my list to repay! But own house saves me about £200pm compared to renting so making great inroads to paying everything back...