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School fee planning for homeowners
A flexible Home Equity Line of Credit, or HELOC, may allow eligible homeowners to draw funds as school fees become due. Subject to the product terms, interest is generally charged on the amount drawn rather than the full agreed credit limit.
This is a home equity loan secured against your home. Eligibility, rates, fees and repayment terms depend on your circumstances and the lender’s criteria.
Private school education and closely related boarding services have generally been subject to standard-rate VAT since 1 January 2025.
15+ Terms
A child’s school fees may need to be planned over 15 or more terms, with additional overlap when siblings attend at the same time.
Beyond Fees
The real cost of independent education
Independent education usually entails a series of costs rather than a single predictable payment. In addition to tuition, families may need to budget for uniforms, transport, boarding, trips, music, sport, equipment and examination charges.
Annual fee increases can add further pressure. Families with more than one child may also face overlapping commitments for several years.
Set against mortgage payments, retirement planning and everyday family life, the real question is not simply how to pay the next invoice. It is about supporting a child’s education without weakening the household’s broader financial position.
School Fees
Uniforms
Transport
Trips
Music tuition
Sports
Equipment
Exam costs
The foundation
Home equity is the difference between a property’s current market value and the borrowing already secured against it.
For eligible homeowners, part of that equity may support additional borrowing for planned education costs. However, property equity does not determine affordability on its own.
This is secured borrowing. It requires appropriate advice, income and expenditure checks, a property assessment and a clear repayment plan.
Example: Where the equity sits
£250,000
£350,000 gross equity
£0
Property Value £600,000
Gross equity is not the amount you can borrow. Lenders assess income, expenditure, credit history, term and purpose, and may apply a maximum combined loan-to-value.
A SMARTER STRUCTURE
What is a Home Equity Line of Credit?
A Home Equity Line of Credit is a flexible facility secured against property equity.
Instead of taking the full approved amount on the first day, the borrower may be able to draw funds as school invoices arrive. Subject to the lender’s terms, interest is generally charged on the amount already drawn.
The borrower may also be able to repay and redraw money within the agreed credit limit and availability period. Product structures, drawing rules and repayment requirements vary between lenders.
Traditional lump-sum loan
Full loan normally released upfront
Interest normally applies to the full balance
Fixed initial borrowing amount
Further borrowing may require another application
Early repayment charges may apply
Connect HELOC
Funds may be drawn when needed
Interest generally applies to funds drawn
Flexible access within an agreed limit
Repaid funds may be available to redraw
Some products may allow fee-free overpayments
Features vary between lenders and products. A HELOC may have a variable rate, and future drawings may be subject to conditions. Arrangement fees, valuation costs, legal charges, account fees or drawdown charges may apply.
The lowest initial monthly payment does not always produce the lowest total cost. Your adviser should compare the rate, fees, term, repayment basis and total projected amount repayable.
A FAMILY EXAMPLE
£100,000 of Education Costs, without Borrowing £100,000 Upfront
James and Sarah expected school fees and related education costs of approximately £100,000 over five years.
Instead of borrowing the full amount on the first day, they considered a flexible facility that allowed them to draw £20,000 at the start of each year.
School fees, uniforms and essential equipment
Monthly payment: £157.67
School fees, transport and extracurricular activities
Monthly payment: £298.76
School fees and educational trips
Monthly payment: £441.08
School fees, music lessons and sports programmes
Monthly payment: £584.95
School fees, study resources and university preparation
Monthly payment: £730.55
The Outcome
Illustrative example only. Calculations assume five annual drawings of £20,000, a 7.49% interest rate and a 30-year capital-and-interest repayment term. The illustration excludes product, valuation, legal and account fees. Actual payments and total costs will depend on the drawing dates, interest rate, fees, repayment basis, and the lender’s calculations. This example is not a recommendation or financial advice.
FREE, NO OBLIGATION CONSULATION
Let us Explore Your Education Finance Options
Whether you are planning ahead, reviewing an existing arrangement or feeling the pressure of rising fees, a Connect education finance adviser can help you understand:
Connect Mortgages is a credit broker, not a lender. After reviewing your circumstances, an adviser can recommend an available lender and product where appropriate. You are not obliged to accept that recommendation.
Confidential. No obligation. No pressure.
Some lenders may accept school fees as a borrowing purpose. Possible routes include a further advance, a remortgage, a second-charge mortgage, or a flexible HELOC.
Approval depends on affordability, property equity, credit history, the proposed term and the lender’s criteria. Available equity does not guarantee acceptance of an application.
A Home Equity Line of Credit is a secured facility with an agreed credit limit. Subject to the product terms, funds may be drawn in stages and interest is generally charged on the amount used.
Rates, fees, availability periods, repayment rules and redraw rights vary between lenders.
Not always.
A HELOC describes a flexible or staged credit facility. A second charge mortgage describes borrowing secured behind an existing first mortgage.
A HELOC could be structured as a second charge, but a conventional second-charge mortgage typically releases a lump sum. The legal charge and product conditions should be confirmed before proceeding.
It depends on the borrowing route.
A further advance may add borrowing through the existing lender. A HELOC or second charge mortgage may run alongside the existing mortgage. A remortgage replaces the current mortgage with a new agreement.
An adviser should compare the cost of keeping the existing mortgage with the cost of replacing it.
This corrects the duplicated answer currently shown under “Is a HELOC the same as a second charge mortgage?”
The amount depends on the property value, existing secured borrowing, household income, regular expenditure, credit history, proposed term and lender criteria.
The lender may apply both a maximum combined loan-to-value and an affordability limit. Available equity alone does not determine how much someone can responsibly borrow.
With many flexible facilities, interest is charged on the amount drawn rather than the unused credit limit.
Other charges may still apply, including arrangement, account, valuation, legal or drawdown fees. The lender’s personalised illustration should explain the applicable rate, charges and projected repayments.
This depends on the product.
Some facilities allow overpayments or full early repayment without a charge. Others apply early repayment charges during an initial period or throughout the agreement.
Check the overpayment limit, early repayment conditions and whether repaid money can be redrawn.
Contact the lender as soon as possible. Early contact may provide more options than waiting until payments have been missed.
Because the borrowing is secured against the property, missed payments can lead to recovery action and may ultimately place the home at risk.
Consider potential changes in income, interest rates, school fees and household spending before committing to additional borrowing.