Early 40's, mortgage, 3 kids and no plan!

First time poster, but learning a lot from this site – all advice appreciated!

Ages: 41 & 44

Annual gross income from employment or profession: €52k; Spouse: €39k (€65k normally, but currently 3-day week)

Monthly take-home pay: Currently €2,600; Spouse: €2,500

Type of employment: Public Service; Spouse: Private sector employee

In general are you:
(a) spending more than you earn, or
(b) saving - €1,400p.m. after holidays, new (to us!) car etc

Rough estimate of value of home: €400k in 2016…?
Amount outstanding on your mortgage: €255k, 27 years left
What interest rate are you paying? 3.55% fixed with BOI until April 2022

Other borrowings – car loans/personal loans etc: none

Do you pay off your full credit card balance each month? Yes

Savings and investments: €35k in current/quick access accounts

Do you have a pension scheme? Public Service DB (will only have 20-25 years service by retirement), approx. €32k in PRSA, contributing €50p.m.
Spouse: occupational pension since 2013, 5% contribution plus employer contribution 7%

Do you own any investment or other property? No

Ages of children: 3 children, ages 6, 7, 7

Life insurance: Mortgage cover only

What specific question do you have or what issues are of concern to you?
I’ve only got around to sitting down and looking at finances recently. Our savings have built up to a more comfortable level since buying the house 3 years ago. We don’t expect to move house again until long-term we decide to downsize. We’d love to do a big renovation project on the house and I’m sure we could easily put €100k into it to make the “dream home”, but that is a want, not a need. Though of course, the sooner we do it the more use we’d gain from it.

In the short-term, I know we need to switch mortgage or at least break out of fixed rate asap. Previously I thought the break fee was prohibitive (recently quoted €2,250) but I’ve since learned on this site that I should have been accounting for interest, not just repayments, so will do that (thanks for info!). In the meantime I’ve upped the repayments by the allowed 10%. Switching might be hampered by spouse being on temporary 3-day week since July. Hopefully back full time in October, but not the most secure of sectors to work in. Also, if spouse goes back full-time, I will likely use parental leave to reduce to 4 days, as we did pre-Covid.

My main questions are:

• How best to save for the children’s third-level education that will hit us in 11-12 years time? Should we invest €30k now in a 10 year state bond, or something else?
• Would it be wiser to save for this education fund (and also maybe save for the renovations project) rather than overpay the mortgage?
• Would we be mad to look for a bigger mortgage to help fund the renovations/dream home project? Maybe it is a pipe dream.

You're doing fine but I'd hold off on extension as you're mortgage is quite high relative to house value and spouses job is a little up in air. I'd hold onto 20k savings as safety net but any extra savings should be used to reduce mortgage,and continue this for a while. Review again in a few years. You can worry about kids education fund and extension etc in a few years, plenty time for that yet and you will still be working when kids in college so can use income to pay college expenses if necessary. Your only priority right now should be your mortgage

The break fee may not be prohibitive if you get cash back and a much lower rate from another bank. Do the calculations and decide if that is possible. Also if you put some of your free cash towards the mortgage when switching you could further reduce repayments (and interest). This would of course reduce your emergency fund.

That's useful, thanks. I'd initially been thinking of reducing the mortgage, but then started worrying we should be saving for x,y & z instead. In general we prefer to save up for things - neither of us has ever had a car loan, holiday loan etc. But happy to get a bit of perspective and probably best to focus on trying to get the mortgage down a bit first.