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Can we afford a bigger mortgage to move to a school catchment area?

Our children are now in their last years of nursery and primary school and our eldest will be applying for secondary school. 

We are thinking of moving to make sure we live within the catchment area of a great secondary school, but realise lots of other parents are probably having the same idea and that makes it expensive.

We know that moving will inevitably mean we will have to take out a bigger mortgage. How do we make this happen, what are the risks and how do we make sure we aren’t over-stretching ourselves?

The children are back at school but for some that means a big year ahead as they decide on secondary schools – and try to get in

This is Money’s Will Kirkman replies: It’s that time of year again when the kids have gone back to school and for many parents with children in their final year a time to start making plans about the next school move.

Stories abound of parents going to great lengths to get their children into a good school, from moving house to converting to a new religion.

Competition is so hot that in some areas nearly half of children are rejected from their preferred secondary school, according to the Good Schools Guide.

On top of the stress that finding the right school brings, if you’re considering moving to a new home in a different catchment area, this brings its own unique set of complications.

Ultimately, whether or not to do so will be a decision only you can make, as everybody’s circumstances will be different.

We would strongly recommend looking into your preferred school’s admissions criteria and the rules your local education authority applies, as there may be specific things you need to know about applying close to the time of a move.

For those that are looking to move, we asked Legal and General Mortgage Club’s Kevin Roberts for his top tips on how to get the finances right.

Kevin Roberts, director of legal and General Mortgage Club, replies: Catchment areas have long been a dilemma for parents who want to secure their children a place at the best local school. 

With private school fees rocketing in many areas, more and more parents are looking to secure a place for their child in the best state schools. 

There are currently just 703 ‘outstanding’ rated state secondary schools, academies and colleges across England, so planning is essential. 

Unfortunately, recent findings have shown that the additional cost of buying a home near one of the best state schools has now climbed to £180,000.

This is a steep premium, but for many parents, it’s a price worth paying. And for those that are planning, now is not a bad time to buy.

More and more parents are looking to secure a place for their child in the best state schools and applications will need to be this winter for next year

More and more parents are looking to secure a place for their child in the best state schools and applications will need to be this winter for next year

Stretching to a bigger mortgage without too much risk 

Mortgage lenders are increasingly introducing cheaper and cheaper long-term 10 or 15 year fixed-rate deals. 

Though not quite as cheap as shorter term deals, these can give parents certainty over their monthly payments until after their child has completed both primary and secondary school. 

Legal and General's Kevin Roberts

Legal and General’s Kevin Roberts

This means you won’t have to worry about your monthly mortgage repayments going up in that time. 

You should also consider how long you want your term length to be.  

Previously, 25 years was a standard term length, but now, terms of up to 30 or even 40 years are available. 

Longer term mortgages have traditionally been an aid to first-time buyers, but with careers lasting longer than in previous generations, mortgage lenders are not opposed to offering a 40-year mortgage to someone in their thirties.

For example, according to finance experts Moneyfacts on a £250,000 repayment mortgage monthly repayments at a rate of 3.5 per cent over 25 years are £1,252. 

Homes within an outstanding school’s postcode carry an average asking price of £427,000 – 73 per cent higher than the national average of £247,000.

Taking into account this premium, borrowing a larger sum of £363,000 over a 40-year term could see monthly payments of around £1,074.59 at a fixed two-year rate of 1.87 per cent.

Fixing vs tracking 

The two main types of residential mortgage deals are fixed-rate and variable-rate, and both can offer something slightly different to someone in your situation. 

Variable-rate products can offer greater flexibility, and help you avoid high early repayment charges if you decide to move again – potentially an outstanding primary school might not sit in the same catchment area as the most reputable senior school in your area, so it’s worth considering this approach. 

Fixed-rate products give borrowers more certainty over monthly repayments and rates are lower than lenders’ standard variable rates which could be a valuable saving as uniforms, school trips and other school expenses do tend to add up to a larger sum than might have been hoped. 

You can read This is Money’s complete guide to variable and fixed-rate deals here.

Be prepared to face higher house prices if you're moving into a desirable catchment area

Be prepared to face higher house prices if you’re moving into a desirable catchment area

Will you get a mortgage? 

Mortgage affordability rules are now more complex than they used to be. While lenders still primarily use income to determine affordability, there are now other checks in place. Alongside reviewing earnings, lenders will also look at outgoings and other debts. 

As moving into a desirable catchment area is likely to involve an increase in total mortgage, it’s sensible to review your current household finances ahead of applying. Paying off any existing debts and reducing other regular outgoings will also help to make sure .

>> For more top tips on how to get the right mortgage deal, read our guide 

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