I'm just throwing around some ideas at the moment, and think this might work!!!
We are planning to demolish/rebuild our house. Have already investigated the options of selling and rebuying etc, and staying where we are is the best financial option for us.
We also have 2 kids in private school, and not a lot of future savings. And I will recieve a substantial inheritance in the future.
Don't like to think about it much. But the reality when your parents are in their 80's make it a "when", not an "if". (So whatever we do now will not be indefinite.
Our borrowing capacity is over $1 mill (absolutely rediculous!!!) so we have the money to "service" whatever we do.
OK - so what I'm thinking is:
We borrow enough to rebuild a new house, plus enough to cover the next 5 years of school fees. The school fees money is left in the account (so we don't pay interest on it?) and used as necessary.
In the meantime we would also be making extra payments, which will also add up towards future school fees etc. (Kids will be at school for another 10 years almost).
I suppose I see the school fees money as a safety net/security thing. Is that strange?
Is it true that if we don't use the money, we don't pay interest?
What am I missing? What are the pro's and con's of doing this? Or is it just a strange way to go about it? We could afford to jsut save the school fees, I suppose. But the idea of having 5 years put away in the bank in advance, to redraw as we need it, just feels more comfortable to me. Then any savings as my pay increases in the future etc will go towards the next 5 years - and fee increases.
(As I said, obviously eventually I will have enough money to pay it all out and be debt free.
WDYT? How would you do it?