I am keen to provide an education fund for my two young children. Am I better off to increase the mortgage payments or start a separate fund using an insurance bond?

Q.

I owe $300,000 on my house and am keen to provide an education fund for my two young children. Am I better off to increase the mortgage payments or start a separate fund using an insurance bond? I can afford $200 a month.

Most insurance bond plans need an initial investment of at least $1,500. Your best option may be to increase your housing payments by $200 a month. This will give you a buffer if rates rise and shorten the term of the loan considerably if they don't. If you keep ploughing funds into the loan it may well be paid off by the time they are 18.