Offsets can help clients fund their kids

I\'ve been discussing the benefits of offset in Mortgage Strategy for a number of weeks but it struck me recently how glad I am that I practice what I preach.

As a father of three grown-up children I’m more than aware of what the blighters can cost but now the first one is ready to head off to university and in need of accommodation in a new city, it’s driven home how important it is to plan for the future.

Research from the Association of Investment Trust Companies shows most parents and students seriously underestimate the costs involved in going to university.

It suggests that while parents on average estimate that their children will graduate with debts of £7,080, the true figures show that the national average debt for students on graduation is closer to £13,500.

Not only are there course fees to consider but there’s also the small matter of rent, bills, mobile phones, TV licences, food, transport, books, keeping up-to-date with the latest fashions and enjoying the odd pint or 10 with mates.

There’s so much financial pressure on parents to provide for their children but for me, it’s the accommodation problem that struck a chord. The average house price has soared to over £200,000 in the past few years and first-time buyers are facing an uphill struggle. I don’t like the thought of my child throwing money away on rent for the next four or five years and then continuing to pay rent after graduating while trying to save enough for a deposit on a flat. It doesn’t make financial sense.

Lifestyle changes like this highlight the benefits of planning. And this is the philosophy behind offsetting. Offset mortgages can help your clients to plan financially secure futures for their children.

Your clients could use offsetting to help their offspring while they are at university in a number of ways.

cammy amaira For a start, parents could save for their childrens’ university years within an offset plan, giving them the benefit of having their money working to help reduce the interest and terms of their own mortgages.

And clients may want to offset if they want to help their children get on the property ladder at some stage. By using their savings to offset against their mortgage they can bring their monthly repayments down but still have access to money if they need it.

In this day and age, we shouldn’t just be thinking about kids’ first bikes or cars. We need to start thinking longer term and planning for their first homes. My offset mortgage is helping me fund this. Suppose I’d better start thinking about how I’ll finance a wedding.