Offset can pay for private school days

The summer has drawn to a close and what a rubbish season it\'s been weather-wise. It has rained for weeks with a glimmer of sunshine here and there and that\'s it.

Every summer we look forward to a tropical heatwave but it is rarely forthcoming. Why we get our hopes up every year I don’t know. At least as adults we don’t have to face the dread of going back to school after seven weeks off.

Looking back it’s clear that those were the days but at the time going back to school was a daunting prospect.

Thankfully my children have left school now so there was no panic this year about having to stock up on back-to-school supplies. These can be costly when you have a few kids in school at the same time.

The summer holidays are often a busy time for borrowers as they are the best time for parents to move while minimising disruption to their children.

Moving to the catchment area of a good school can make properties more expensive, making home moves more costly if this is a priority.

And if parents are looking to send their children to private school, this can be pricey too. Recent research from the Independent Schools Council highlights that the average private school fee is 3,751 per term, which is not exactly small change. The ISC research also discovered that extras such as extracurricular activities and the costs of uniforms and supplies can add as much as 10% to the bill.

So sending your children to private school is an expensive business and parents need to find the cash from somewhere.

Rather worryingly, more than 18,000 loans worth an estimated 165m were taken out last year to cover private school fees, according to a recent financial report from Sainsbury’s.

If your clients want to send their children to private school, most will need to undertake sigcammy amaira nificant financial planning.

Regular savings from the time their children are born will help and if the accounts created are linked to offset deals, this can cut mortgage terms and save enough interest to cover the costs of private education.

For instance, if a client was to save just 100 a month in a five-year offset tracker borrowing 180,000 on a property worth 250,000, they would save a staggering 44,895 in interest and shave two years and 11 months off the mortgage term.

The interest savings alone would be enough to pay the school fees with money left over to pay for a nice treat for the parents. This is more sensible than taking out a costly loan.