Case Study – A remortgage to help meet university education costs

James and Elizabeth have two children who are both in private school and they are struggling to pay for the school fees out of their income alone. Currently they have a mortgage with Portman for £180,000, in addition to which they have a secured loan from the mortgage company for a further £20,000. Both of these amounts are on the standard variable rate at present that is 5.69%.

As they have an interest only mortgage the monthly payment for these two is £948.33. Recently they have taken out an unsecured personal loan with First Direct for £20,000 on a fixed rate of 7.9% over five years, which is costing them £404.57 per month and they are finding this a burden on top of the mortgage. They are also concerned about future school fees and are uncertain about how they might pay them. They have a property worth £550,000.

We re-mortgaged combining all the existing debts into one mortgage on a fixed rate for 2 years at 4.99%. The valuation fee and legal fees for this mortgage were paid for by the lender. This meant that the only cost of re-mortgaging for the client was the £185 arrangement fee.

The monthly cost for the whole £220,000 of existing debt is now £914.83, a saving of £438.07, leaving plenty to invest to pay off the increase to the mortgage over the next 15 years. Best of all, the lender has a drawdown facility that allows James and Elizabeth access to more of the equity in their property without having to re-mortgage should they need further money for school fees and university education in the future.