Cut your mortgage costs and pay for your children’s education

freedoms” to bequeath cash to pay for school fees. The reforms allow unspent pension savings to be inherited free of IHT. Income tax is due, but only at the recipient’s marginal rate of income tax, which for a non-earning schoolchild is likely to be 0pc.

Many families struggle to pay fees out of income, but have highly valuable property assets. Sarah Coles, of stockbroker Hargreaves Lansdown, said homeowners could consider taking out an “offset” mortgage. You will need healthy equity – upwards of 60pc – and be prepared to pay a slightly higher interest rate than on a conventional mortgage.

Offset mortgages work by linking a savings account, offered by the same lender, to the loan, which reduces the sum interest is paid on. If you had £150,000 of mortgage debt and £50,000 in a linked savings account, you would pay interest only on £100,000.

Mrs Coles said: “You can then keep the school fee money in the linked savings account, so you don’t pay mortgage interest on it until you need to of children are educated privately Total cost of a typical day school between the ages of 11 and 18 privately educated students will study at Oxford or Cambridge pay the school. You can top up the account with any bonus or income from other investments in order to bring interest payments down again.”

The easiest way to cut education costs is to qualify for a fee reduction. Scholarships have been offered for decades, but the number of bursaries, which unlike scholarships are not necessarily linked to academic prowess, has grown spectacularly in recent years, said Mrs Moody-Stuart.

“For the squeezed middle, the most exciting thing is the number of significant bursaries. Schools are coming under increasing pressure from the Charities Commission [which regulates charitable schools] to offer these packages. That’s how many people will find a way,” she said.

“There are the traditional scholarships for music and sports, and then some esoteric ones – some schools offer a fee discount for moral character, for instance.”

Bursaries can range from a 1pc reduction in fees to complete exemption. It is thought around 5pc of private school students are educated free of charge.