Education Loans - page 2

Paying for your childrens education

Using loans, mortgages and other options to pay for school and university fees

Don't however think automatically in terms of borrowing a lump sum to be repaid over several years. Flexible mortgages are now available where the sum required per term is borrowed as and when needed. Northern Rock offers such a mortgage at a fixed 5.29 per cent on 75% of the property value; it also carries the advantage that it can be repaid early without penalty. This seems to be a welcome alternative when some part of the funds will not be required for some time - why pay now for money which will not be needed for a year or two?

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Alternatively a straight forward loan may be preferred by some parents, although the cost is likely to be a little higher than if using the mortgage route. Borrowing £10,000 or more from Sainsbury's Bank will cost 6.1 per cent at present and this seems to be a popular method of raising funds; the bank claims a 38% rise in the number of school fee loans in the past year.

If you believe that there is even a slight possibility of problems with your choice of school for your children, it would pay you to start making plans as soon as possible. Going to a new school can be daunting enough for a child, and it is far better if the arrangements go smoothly and quietly. A last minute panic with a question mark over the educational destination will do nothing for the peace of mind of either child or parents.

Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. Security by way of a charge on your home may be required. Think carefully before securing other debts against your home.

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