Parents turning to property wealth to fund rising school fees

More parents are using remortgages, further advances and second-charge loans to help fund private school fees as rising education costs continue squeezing household finances.

The trend follows Labour’s decision to remove VAT exemption on private school fees last year, a move which has significantly increased costs for many families.

According to analysis highlighted by The Telegraph, the average cost of private education from reception to sixth form has now reached around £349,000, with London and boarding fees considerably higher.

Industry figures suggest many families are increasingly relying on housing equity to bridge the affordability gap.

GROWING INTEREST

Clare Jupp, managing director at The School Fees Company, said some parents were already struggling before VAT was introduced.

She said: “Some were just about paying their school fees every month before January 2025, and so, with the addition of VAT on school fees, which in effect gave the equivalent of 4-5 years’ worth of normal inflationary increases overnight, there was no opportunity for salaries to increase in unison.”

Mortgage advisers are seeing growing interest in equity release through remortgaging, particularly among borrowers in their 40s and 50s who benefited from historic house price growth.

Others are turning to second-charge mortgages or further advances to avoid disturbing cheaper existing fixed-rate deals.

AFFORDABILITY

Mark Harris, CEO at SPF Private Clients, warned affordability remains a key consideration for lenders.

He told The Telegraph: “The lender will want to see evidence that you can afford the extra payments, and this assumes you have enough equity in your home to borrow against.”

Equity release products are also increasingly being used by grandparents helping fund education costs, although advisers continue warning that long-term borrowing against property wealth carries significant financial risks.

Industry experts say the growing trend highlights how rising living costs are increasingly forcing households to use housing equity to fund major life expenses.