Equity Release for School Fees – Is It Possible?

Are you keen to discover if you can use equity release to help pay for school fees? We’re here to help. This article aims to answer your queries, explain the process, and guide you through the options.

Every month, over 7,000 people come to us for advice on equity release, making us a trusted source for clear, simple guidance.

In this article, we’re going to explain:

• What equity release means.
• How it might put your home’s value at risk.
• The different types of equity release plans.
• How to get a realistic quote for equity release.
• If you can use equity release money for school fees.

We’re here to support you every step of the way, providing easy-to-understand advice based on real-life experiences. Let’s start unraveling the specifics of equity release together.

Equity release for school fees – is it allowed?

Yes, it’s possible for parents or grandparents to use a lifetime mortgage or home reversion plan to access money and use it to pay for school fees. This is sometimes done to help loved ones pay for private education or university fees.

For example, you might own a £400,000 property and want to help your granddaughter to a private school costing £15,000 per year for five years. Therefore, you take out a lifetime mortgage of £75,000 and agree to a rolling interest to accumulate on this debt. The debt will keep growing over time, but it won’t be repaid in full until:

1. The last surviving homeowner dies
2. The last surviving homeowner moves into care

The parents of the grandaughter may be grateful to you for helping with school fees. And so they offer to voluntarily pay the interest each month on the lifetime mortgage. This will keep the debt at £75,000 and stop it from growing significantly. 

What can you use equity release money for?

You can use equity release for any purpose you wish. 

You can use it to help pay for school fees, and you could also use it to:

1. Pay for private medical costs
2. Buy investment properties or make other investments
3. Gift the money to loved ones
4. Make home improvements (you might need approval!)
5. Go on lavish holidays or buy a new car 

Can I give equity release to my children?

Yes, you can give any amount of money you receive from equity release to your children or grandchildren, but there could be inheritance tax complications. 

The money you gift to loved ones is not subject to inheritance tax as long as you live for seven years after giving away the money. 

If you give the money away and die within seven years, the money could be subject to inheritance tax if it exceeds the inheritance tax threshold. 

Equity release to pay for school fees (Quick recap!)

You can use equity release schemes to pay for school fees, such as a lifetime mortgage or home reversion plan. However, you should get financial advice before making a big decision like this. And you should only consider lenders who are a member of the Equity Release Council.