Borrowing against home equity for education

Why property wealth is paying for learning

Education costs are climbing across the UK and families are feeling the pinch. In England, total student loan outlay is forecast to rise by 26 percent by 2029-30 as average loan sizes grow and more undergraduates enter higher education. At the same time, most UK universities are projected to run deficits by 2025-26, a pressure that often feeds through into higher fees or fewer subsidies. Add everyday living costs and the numbers strain household budgets. Even in the North of England, where student rents are lowest, typical monthly rent is around £530, and costs are higher in London.

That backdrop is pushing parents and grandparents to consider alternative funding, including borrowing against home equity. The market is active. Older homeowners unlocked £636 million in Q2 2025 through equity release, with average lump sums up year on year. Meanwhile, mortgage pricing has edged lower on new lending, improving affordability for some second-charge and remortgage options.

Home equity can offer lower rates than unsecured borrowing and longer terms that match multi-year education timelines. It can also be structured flexibly, from interest-only repayments to drawdown lines. But it is still secured borrowing against your home, so careful analysis is essential.

Understanding APR is not just about percentages - it is about what you will pay in real terms over time.

A measured plan can blend resources: a parent’s second-charge loan for school fees, a grandparent’s later-life mortgage for a university fund, and careful budgeting for rent and essentials. The goal is simple: fund education without compromising long-term financial security.

Who might this suit

If you have built up equity and want to fund private school fees, university tuition, or broader student living costs, property-backed borrowing can be a practical route. It often suits families who prefer predictable monthly payments over a defined term, or those seeking flexible drawdown for staged expenses across academic years. It can also work for later-life homeowners supporting children or grandchildren, provided the plan protects retirement income and inheritance goals. If you are unsure which path fits, a broker can help you compare costs and risks clearly.

Your main routes to funding

1. Remortgage to raise capital - replace your mortgage and borrow extra at a single rate.

2. Second-charge homeowner loan - keep your current mortgage, add a separate secured loan.

3. Flexible drawdown secured facility - a line of credit against equity to use as needed.

4. Equity release lifetime mortgage - for over 55s, interest rolls up or pay-as-you-go options.

5. Retirement interest-only mortgage - interest-only payments, capital repaid later from the property.

6. Guarantor or offset structures - family support to reduce cost or improve affordability.

Cost, cashflow, and risk at a glance

Can you qualify

Lenders look at income, existing commitments, credit conduct, property value, and your loan-to-value. For remortgages and second-charge loans, affordability tests model higher stress rates to ensure you can sustain payments if rates rise. If your current mortgage is competitive, a second charge can ring-fence that deal while releasing extra funds. Flexible facilities can suit termly fee schedules but may carry variable pricing. Later-life options such as lifetime mortgages or retirement interest-only consider age, property type, and in some cases income for servicing interest. Equity release can reduce inheritance, so talk this through with family. Regional variations matter too - London homeowners often have more equity headroom than other regions, which can alter loan sizes. Kandoo, as a UK broker, can compare multiple lenders across these structures, set realistic budgets, and ensure that any plan aligns with your wider goals, including paying down debt sooner if circumstances improve.

Step-by-step to a suitable plan

1. Define education costs and timeline by term and year.

2. Check current mortgage deal, balance, and early repayment charges.

3. Assess equity, property value, and target loan-to-value range.

4. Run affordability checks against stressed interest rates.

5. Compare remortgage, second charge, and later-life options.

6. Choose structure, finalise term, and lock rate if available.

7. Complete valuation, legal work, and draw funds as required.

8. Review annually against fees, rent, and loan performance.

Pros and trade-offs

What to check before you commit

Start with the whole cost picture, not just the rate. Fees, valuation, legal work, and early repayment charges can shift the equation, especially if you intend to overpay later. Model scenarios for rent, travel, and course materials alongside tuition to avoid surprises - living costs vary widely by region and are highest in London. Build resilience with an emergency fund or an agreed payment holiday feature if available. If you are over 55, compare lifetime mortgages with retirement interest-only to balance flexibility and inheritance goals. For parents, check how changing mortgage terms affect your future remortgage options. Finally, test affordability at stressed rates and review the plan annually as fees and student loan rules evolve.

Other ways to cover the gap

1. Use ISAs or other savings allocated to education.

2. Combine smaller unsecured loans for short-term needs.

3. Scholarships, bursaries, and hardship funds from schools and universities.

4. Employer support, apprenticeships, or part-time study to reduce borrowing.

Frequently asked questions

Q: Is borrowing against equity cheaper than a personal loan? A: Often, yes. Secured borrowing typically has lower rates and longer terms, lowering monthly cost. The trade-off is risk to your home and potentially higher total interest over time.

Q: Should I remortgage or take a second charge? A: If your current mortgage rate is high or near expiry, remortgaging can be efficient. If your main rate is competitive with large early repayment charges, a second charge can preserve it while raising funds.

Q: How do later-life options work for grandparents? A: Lifetime mortgages allow cash release with no mandatory payments, though interest compounds. Some plans let you service interest to control balance. Retirement interest-only keeps balance steady but needs provable income.

Q: Are rates improving for equity-based borrowing? A: New mortgage pricing has edged lower recently, improving affordability in some cases. Availability and rates still depend on credit profile, property type, and lender appetite.

Q: Can I draw funds term by term? A: Yes. Flexible secured facilities and some lifetime mortgage drawdown plans let you access funds in stages, so you only pay interest on amounts used.

Q: Will this affect student loan eligibility? A: Property-backed borrowing does not change student loan eligibility, but it can reduce the need to rely solely on student finance for living costs.

Ready to make a plan

Kandoo can compare remortgage, second-charge, and later-life lending across UK lenders, lay out total costs, and structure funding to match academic timelines. Speak with us to assess affordability, protect your home, and secure a tailored route that supports education without derailing your long-term goals.

Important information

This guide is for information only and is not advice. Secured lending places your home at risk if payments are missed. Eligibility, rates, and terms depend on your circumstances. Consider independent advice, especially for later-life borrowing and tax or inheritance implications.