Sending your child or children to private school can enrich their learning. Not only will they benefit from smaller classes and one-to-one teaching, but they will also be able to enjoy a wider range of extracurricular activities.
However, all of this comes at a price and paying for private education can be costly, so it’s important to consider your options carefully.
Planning ahead early on and saving as much as you can into a tax-free ISA or investing in a well-diversified portfolio are popular ways to help cover the cost of private school fees. But another option to consider is a home equity line of credit or HELOC.
A HELOC works by enabling you to borrow against the equity that you’ve built up in your home. You then receive your funds as a line of credit, rather than a fixed lump sum as you would with more traditional borrowing methods.
Applying for a HELOC with Selina Advance will enable you to borrow between £25,000 and £1 million. You’ll then have a five year ‘flexible’ period in which you can draw on your funds (up to your agreed limit), repay them and then redraw as many times as you wish.
This flexibility can be hugely beneficial when it comes to paying private school fees as you’ll be able to draw on funds as and when required, whether that’s once a term or once a year.
You won’t have to pay for the funds that you left untouched. You can repay your loan over a term of five to 30 years, whatever suits your finances best. Repaying over a longer term will reduce your monthly payments, but also means you will pay more in interest overall.
If you decide to pay off your loan earlier than planned, in part or in full, or you want to pay slightly more one month, you can do so without worrying about early repayment fees.
A HELOC could be worth considering if you’re looking for a flexible way to pay for private school fees without the need to rely on savings or investments.
It could also be a good alternative to more traditional forms of borrowing such as a loan or remortgaging your property. With both of these options, you’ll receive a lump sum of cash which might only cover fees for a set period, or you might need to deposit some of it into a savings account until the next lot of school fees are due. You will also need to pay interest on the full sum borrowed even if you don’t end up using it all. Alternatively, you might need to borrow more later down the line.
If you are thinking about applying for a HELOC, it’s important to be aware of the eligibility criteria. As with most loans, you will need a good credit score, but you will also need to be a homeowner and be on the title deeds of the property. Keep in mind there are other eligibility criteria you will need to meet.
Ever wondered how a Home Equity Line of Credit (HELOC) works and whether it could be right for you? Our ultimate guide explains everything you need to know.
Borrowing against your property has many advantages. For a start, because you are using your home as security, lenders will usually let you borrow a larger sum of money, which can be useful if you’re planning extensive home improvements, for example.