Knock £2,100 off University tuition fees with an offset mortgage
It's the time of year again when parents are preparing their children to fly the nest and head to University.
Following this year's substantial rise in tuition fees, first direct suggests a way to reduce the cost of sending a child to University by using its offset mortgage.
Over a 3 year course at University a student could pay £27,000 in tuition fees alone. Whilst student loans are available to cover this cost it's worth remembering that, as well as the amount borrowed, there will be interest to repay. As a result almost two thirds of parents are planning to save more to help contribute to University costs. 15% of parents in the UK are hoping to cover the full cost of their child's tuition fees and living expenses and over 30% will pay the majority.
By offsetting savings held aside to pay tuition fees, parents will reduce the amount of mortgage debt which is subject to interest. As a result, for those parents who require a mortgage and have savings ready and waiting to pay for their child's degree next year, an offset mortgage could save them nearly £2,100 in just three years.
Interest saving
Parents who've planned ahead and already amassed savings to pay for their child's education when they go to University in September 2013 could save nearly £2,100 in interest, effectively reducing the impact of tuition fees.
However, even parents whose children are matriculating this September can use the savings set aside for University fees to shave nearly £1,050 in interest of their mortgage.
Ian Bartholomew, Senior Mortgage Manager at first direct commented: "Sending a child to University can be expensive and a student loan can haunt them for years after they've graduated. For those parents who've saved money for their child's education an offset mortgage is a great idea. Whilst the savings are sitting in their account waiting to pay tuition fees they're also reducing the interest payable on their offset mortgage."
For more information, visit firstdirect.com.