Two in five parents would spend more on a new home near a top school

School league tables and Ofsted reports influence parental decisions

07 October 2013

Nationwide has added five new equity funds to its investment panel to expand customer choice.

Two of the new funds are invested in emerging markets, two in global equities, while the fifth is primarily made up of UK investments.

Investors with Nationwide now have a total of 25 funds to choose from, reflecting a wide range of options across geographic regions and asset classes.

The new funds are:

  • Artemis Income - aims to produce a rising income with capital growth from portfolio primarily made up of investments in the UK
  • Threadneedle Global Equity Income - aims to achieve a high and growing income over the long term from a portfolio of predominantly global equities
  • Lazard Emerging Markets - aims to seek long-term capital growth by investing primarily in companies in or doing business in emerging markets
  • M&G Global Emerging Markets - aims to maximise long term total return (capital growth and income) by investing in emerging market countries
  • L&G International Index - aims to provide growth by tracking the performance of company shares in the FTSE World (ex UK) Index

Guy Simmonds, Nationwide Head of Product, Protection and Investment, said: “We are continuing to offer our customers a wide choice of funds to invest in across both in the UK and across the world, and in both emerging and established markets.

“Nationwide is offering accessible advice on the high street and aims to support our customers to achieve their long term investment goals, whether they are investing for the first time or an experienced investor.”

Customers can make payments into a portfolio of funds and investments options are available through advisers in branches. Customers can make either lump sum investments, regular payments or a combination of both.

As with all of Nationwide’s investment products, there will be a 3 per cent initial advice fee followed by a 0.5 per cent ongoing service charge. The advice fee to access the regular payment option is based on 3 per cent of monthly premiums over 48 months.

Nationwide has a range of investment funds from some of the UK’s leading fund managers, carefully selected, regularly reviewed and designed to help meet individual investment needs. These are provided through Legal & General.

Price of typical UK home: £172,1272
% increase  New house price School premium
2 per cent increase £175,570  £3,443 
5 per cent increase £180,733  £8,606 
10 per cent increase £189,340  £17,213 
12 per cent increase £192,782  £20,655 
15 per cent increase £197,946  £25,819 
20 per cent increase £206,552  £34,425 

Mortgage considerations**

The additional cost of the house will also have implications on the cost of the mortgage. Paying an additional 10 per cent on the cost of a typical UK home (£172,1272) would mean buying a house worth £189,340.

Based on a 15 per cent deposit, a house worth an additional 10 per cent would require an extra £2,582 deposit and, if for example, Nationwide's five-year Flexclusive tracker mortgage*** was taken out, would also mean an extra £76.75 per month in mortgage repayments. So, in the course of the first year, parents would need to find an additional £3,503 and, over a five-year period, it would cost £7,187 extra.

Parents are already making house purchase choices based on schools. Our research shows that nearly one in five of parents (18 per cent) admit that a school league table or school Ofsted rating has influenced where they chose to live.

Richard Napier, Nationwide's divisional director for savings and mortgages, comments: "Choosing the right school for your child is possibly one of the most important decisions a parent will make and it appears league tables and Ofsted reports play a significant part in that decision.

"Competition for places at the UK's best schools continues to increase and, although household finances remain stretched, it is significant that a number of parents are willing to pay more on the price of a new home to ensure their child goes to a good school.

"Taking the cost of a typical UK home, any parent willing to pay 10 per cent more would need to find an additional £17,000 on the total cost of the house, which is a lot of money in the current climate. And, this is before you factor in the cost of items such as uniform, P.E. kit, lunch and even travel to and from school.

"And with the additional monthly repayment on Nationwide's five-year Flexclusive tracker mortgage*** being an additional £76.75, it may well be a premium parents think is worth paying."

Notes to editors:

* http://www.theguardian.com/education/2013/sep/03/free-schools-open-pupils

1 All figures, unless otherwise stated, are from YouGov plc. Total sample size was 1,012 UK parents of children aged 5-16 years whose child will be attending school in the next academic year. Fieldwork was undertaken between 7th - 13th August 2013. The survey was carried out online.

2 Source: Nationwide September House Price Index

** Deposit calculations
15% deposit on £172,127 = £25,819
15% deposit on £189,340 = £28,401
Deposit difference: £2,582

** Monthly repayment calculations
Property value: £172,127 / Loan: £146,308 / Term: 25 years / Mortgage: 5 year Flexclusive Tracker (Rate used: 3.94%)
Monthly repayment: £767.42
Property value: £189,340 / Loan: £160,939 / Term: 25 years / Mortgage: 5 year Flexclusive Tracker (Rate used: 3.94%)
Monthly repayment: £844.17
Monthly payment difference: £76.75

*** The mortgage product and monthly payments shown above are for illustration purposes only. They are based on a new customer moving house, the initial rate during the deal period and on a capital and interest repayment method. They do not take into account any fees or charges payable for changing the mortgage, or the applicable interest rate when the mortgage deal ends.

To get access to our range of Flexclusive offers you must either:

1. Hold a FlexAccount with a Visa debit card (not cash card or cash card+) and:

  • Have been paying in £750+ a month (excluding internal transfers) for the last 3 months; or
  • Complete an account switch to us (from a non-Nationwide account) using our Current Account Switch Team or have done so in the last 4 months; or

2. Hold a FlexDirect or FlexPlus account.

About Nationwide Building Society
Nationwide is the world's largest building society as well as one of the largest savings providers and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million members.

Customers can manage their finances in a branch, on the telephone, internet and post. The Society has around 15,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

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