Using home equity to pay school fees

The reality on school fees and why equity matters

Private education costs have risen sharply across the UK. Average independent day school fees now sit around £19,000 to £22,000 a year, with some prestigious schools increasing by nearly £11,000 in a single year. Since January 2025, the 20% VAT on fees has pushed annual costs higher still - typically adding around £3,468 a year, and much more in some regions. For families with children entering Year 7 today, that uplift can mean more than £17,000 extra over five years before GCSEs. Boarding fees remain in a different league entirely, and lifetime costs for a full private education can run to £377,000 for day pupils or £763,000 for boarders.

These figures are not simply headline noise. They translate into monthly budgets, cash flow stress and difficult choices about school moves, bursary applications or cutting back elsewhere. Pupil numbers in England have already dipped by about 1.9%, while schools have increased bursary support. Even so, the maths for many households no longer balances without a new approach to funding.

Home equity can provide that structure. If you own a property, a secured loan or specialist homeowner finance lets you turn part of your home’s value into a lump sum or staged drawdown to cover fees. Fixed monthly repayments can create predictability in a period where fee inflation is anything but predictable. For some, paying several terms upfront unlocks discounts. For others, a tailored plan spreads VAT-hit costs without selling investments or disrupting ISA allowances.

Understanding APR is not just about percentages - it is about what you will pay in real terms and whether repayments sit comfortably alongside your mortgage and daily outgoings.

Kandoo is a UK-based retail finance broker. We help you compare homeowner funding options from £10,000 to £1,000,000, looking at affordability, term length, interest rate structure and flexibility such as overpayments. The aim is straightforward - keep your child’s education on track while keeping your wider financial plan intact.

Who benefits most from this approach

If you are a UK homeowner facing steep fee rises, home equity can bridge the gap without raiding emergency savings or crystallising investment losses. It particularly suits families who plan to remain in their property, have stable income and value fixed repayments to match school terms. Parents managing multiple children in private education, or those in higher-cost regions such as the South East and East of England, often find the ability to smooth cash flow especially useful. It can also help grandparents who wish to contribute in a tax-efficient, structured way. If you are undecided between moving schools or staying the course, a well-shaped facility can buy time and preserve continuity.

Ways to fund fees using your property

1. Secured homeowner loan - fixed monthly repayments over 3 to 15 years.

2. Second charge mortgage - a separate loan alongside your main mortgage.

3. Further advance from your existing lender - extend your current mortgage.

4. Remortgage to raise capital - potentially lower rates but involves switching.

5. Flexible drawdown facility - take funds in stages to match terms.

6. Equity release for over-55s - lump sum or drawdown without monthly repayments.

7. Advance fee plans via specialist partners - pay multiple terms upfront for discounts.

What it could mean for your money

Can you qualify and what lenders look for

Eligibility is primarily about affordability and security. Lenders will assess your income, outgoings, credit profile and the available equity in your property. As the loan is secured against your home, they will also look at your loan to value, property type and location. If you have an existing mortgage, a second charge can sit alongside it, while a further advance or remortgage extends or replaces the current deal. Terms typically range from 3 to 25 years for secured loans and can be longer for equity release where monthly repayments are not required.

Kandoo works with a panel of UK lenders to match your circumstances with products that fit your budget and timescale. We consider whether a fixed rate suits you better than variable, whether a drawdown facility aligns with termly bills, and how to preserve flexibility for overpayments without penalties. Age, residency status and credit conduct all matter, but good cases are often about shaping the right structure - for example, borrowing to cover the VAT uplift and the next two to three years of expected increases, then planning to reduce the balance as salary grows or bonuses land. If you are over 55, equity release solutions can be explored, with careful consideration of long-term roll-up interest and estate impact.

From enquiry to funds - the practical steps

1. Share your goals, timelines and school fee schedule.

2. Get an initial affordability and equity assessment.

3. Compare secured loan or drawdown options side by side.

4. Choose fixed or variable and desired repayment term.

5. Complete application and property valuation checks.

6. Review offer, including fees and overpayment features.

7. Legal formalities and completion arranged with lender.

8. Funds released to you or directly to the school.

The balance sheet view

What to check before committing

Cost of funding should be weighed against expected fee rises and any advance-payment discounts. Fixed rates bring stability, but you will want to understand early repayment terms so you can overpay if bonuses or windfalls arrive. Run a realistic stress test on your budget, including mortgage payments, utilities and childcare. If your region has seen above-average VAT-related hikes, sense-check how many years of schooling you plan to fund and whether a staged drawdown is more efficient than a single lump sum. If grandparents are involved, align contributions with the product features and your wider inheritance plans. Keep an eye on property market movements and do not assume future remortgages will always be cheaper. Finally, review insurance such as income protection to safeguard repayments.

Alternatives if equity is not the right fit

1. Bursaries and scholarships - check eligibility early with each school.

2. Monthly school payment plans - sometimes with limited or no discounts.

3. Unsecured personal loans - faster to arrange but often higher rates.

4. Family gifting or loans - consider tax and documentation.

5. Investment portfolio drawdown - mindful of market timing and CGT.

6. Salary sacrifice or child benefit optimisation - minor but cumulative gains.

Common questions, clear answers

Q: How much have fees actually risen this year? A: Day fees now average around £22,000 a year, roughly 22.6% higher than last year in many cases. The 20% VAT introduced in 2025 has added thousands more annually, with strong regional variation.

Q: Can a secured loan really lower my overall cost? A: If paying upfront secures meaningful school discounts, the saving can exceed interest costs. The result depends on your rate, term and ability to overpay, so comparisons are essential.

Q: What if rates fall later? A: Fixed rates provide certainty. Some products allow overpayments or refinancing later. Factor in any early repayment charges when comparing offers.

Q: Is equity release suitable for school fees? A: For over-55s, equity release can work where income is tight but property wealth is strong. It removes monthly repayments but increases the debt over time, reducing your estate. Specialist advice is crucial.

Q: Will using equity affect future remortgaging? A: Additional borrowing changes your loan to value and may affect future mortgage options. A broker can help structure the amount and term to preserve flexibility.

Q: How quickly can funds be arranged? A: Many secured loans complete within 2 to 4 weeks, subject to valuation and legal checks. Equity release can take longer. Start early in the term to avoid pressure.

Ready to move forward

Kandoo can help you compare homeowner finance tailored to school fees - from fixed-term secured loans to flexible drawdown and equity release for later-life borrowers. Share your fee schedule, property details and budget, and we will line up suitable options, explain total costs and map out a repayment plan that works for you.

Important information

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Kandoo is a broker, not a lender. Rates, terms and eligibility depend on your circumstances and property value. Consider independent financial advice, especially for equity release and tax matters.