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Legal & General trusts its in-tuition

Legal & General is combining owning a home with education with its in-tuition mortgage.

In-tuition is a flexible mortgage aimed at first time homeowners who are planning their first children and who are concerned about the amount of money that their children’s education will cost them.

The mortgage has a discount of 0.5 per cent for the first two years of the mortgage, giving it a payable rate of 6.45 per cent for loans of up to 75 per cent of valuation. It is also fully flexible and offers underpayments, overpayments, lump sum withdrawals and payment holidays. Interest is calculated daily. There are no redemption penalties.

Borrowers can use the overpayment facility to build up a reserve of capital, which can then be used in the future to pay for things like private school fees or the cost of further education.

The cost of education is now quite high. According to the figures from the Independent Schools Information Service for 2000-2001, the cost of privately educating a 13 to 18 year old child can cost between £1,700 and £3,000 per term for day fees alone. Boarding fees alone can cost between £3,200 and £5,000 a term.

Figures available from the National Union of Students show that the cost of a college education can average out at £7,700 a year in tuition fees, rent, clothing, food and books.

According to Moneyfacts on April 12, 2001 the Legal & General in-tuition mortgage is not the most competitive on the market. The cheapest two-year flexible discount mortgage is the two per cent discount mortgage from the Universal Building Society. This has a discount of two per cent for the first two years of the mortgage, giving it a payable rate of 5.44 per cent for loans of up to 75 per cent of valuation. There are no redemption penalties and it has the same flexible features as Legal & General’s product.

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