I'm afraid TrueBlue has completely lost me here! To me (and granted, Iâ€™m no financial expert), the difference between cash in the bank and the equity in my property is that one is real money and the other is not. You can choose to put your money into the bank, or to invest it in other assets, and I can follow TrueBlue's thread that far; but you don't make a choice to invest any actual cash into equity - thatâ€™s just a notional sum which has accrued due to market conditions, and can just as easily disappear (for most home owners it is doing so right now!). Itâ€™s a bit like the difference between shaking hands with someone else, and trying to shake your own hand in one of those mirror box thingies â€“ you can get hold of the first, but the second is just an illusion!Sorry about this folks but a quick look at any of the search sites will reveal simple options for bonds producing 4.5%, before tax. Money being worked, and belive me people with Â£500k in cash make sure the money is being worked, will produce more than this, even in this climate. In addition, in the calculation of means tested assessment, this is a notional income, and it already accepts that the person has made a choice to retain the equity in either cash or as equity in a property or a pension fund which is still available, rather than coverting that equity into a more liquid form such as cash to pay the fees. I am sorry, but I do see little difference between equity, pension fund, and cash. Both of the former can be borrowed against or promised to raise cash, and I feel that none of us would feel happy about someone sitting on a pile of Â£100k, Â£200k or Â£500k of cash whilst receiving a subsidised education which perhaps a more financially deserving case is being denied. I have said before that both ends of the income scale are easy to assess, the very rich should pay not just full fees but full fees+, and the very poor should pay very little, but the sliding scale inbetween is very difficult to deal with.
Another difference is that if I withdraw hard cash from the bank, Iâ€™m simply reducing my capital. But if I borrow to release the equity in my home (an option BTW which a quick search of the internet suggests is usually only open to the over 60s), or against the promise of a future pension (again, apparently not open to those in occupational pension schemes), Iâ€™m creating a debt, which will need to be back with interest.
As far as I can tell, the only way of 'converting equity into a more liquid form such as cash to pay the fees' as TrueBlue suggests would be for us to sell our house. Which is all well and good, but where would we put all the childrens' luggage when they come home for the holidays?
So OK, I quite agree that "none of us would feel happy about someone sitting on a pile of Â£100k, Â£200k or Â£500k of cash whilst receiving a subsidised education which perhaps a more financially deserving case is being denied" - but I can't agree with the suggestion that an ordinary family living in an ordinary house with a mortgage still to pay off is doing anything of the sort!! I genuinely do believe that there is a difference between equity, pension fund, and cash.
And one final thought: if it really is that easy to convert equity into cash, why aren't the CH Foundation doing it?