Moneymakeover Children getting close to college age

[Super Sesame]

Personal details

Your age:46
Your spouse's age:47

Number and age of children: 3,ages 7, 12 and 16


Income and expenditure
Annual gross income from employment or profession: 82,000 +10% bonus once a year
Annual gross income of spouse/partner: 72,000

Monthly take-home pay: Not sure as don't have payslips right her but my own take home is about 4,300 plus around 3,600 for husband I think. He is public sector so appears to have less to take home due to higher pension.

Type of employment - e.g. Employee or self-employed:Both employees, one public and one private sector.

In general are you:
(a) spending more than you earn, or
(b) saving?

Saving, varies by month but if no big bills, save about 3,000 to 5,000 a month


Summary of Assets and Liabilities
Family home value: About 1.5m at a guess
Mortgage on family home: 310,000 left over 23 years
Net equity: 1m ish

Cash:
Defined Contribution pension fund: mine is 130,000 today. No idea on husband public sector pension value,he doesn't appear to have access to see it online like I do.
Company shares :0
Buy to Let Property value:No
Buy to let Mortgage: No

Total net assets: house and pensions


Family home mortgage information
Interest rate:2.1%
Type of interest rate: tracker, variable, fixed: fixed until late 2027

Remaining term: (Original term is not relevant):23 years
Monthly repayment: 1425 monthly

Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? Don't have one
No car loans or other loans.
School fees around 6000 a year.


Other savings and investments:
Bank savings, around 40,000, but this goes up and down a lot while we continue to spend on house improvements.


Other information which might be relevant

Life insurance: yes through work
Health insurance all family covered by my employer


What specific question do you have or what issues are of concern to:
My eldest is 16 and we are thinking of college. It'll be one child after another over about 9 years going to college.
We are thinking of investing in a flat for them as they'll have to live away for college and dont really want to pay for 9 years of rent.
I know we won't know where they chose to go but hopefully it will be nearest city and if not, we figure we can get it rented to other college students. A two bed older type flat would be around 270,000. With annual charges and possibility to rent out other room to cover that and mortgage cost, it seems to make sense. But I'd appreciate opinions. I know the summer/breaks we'd need to cover the costs.

Is there a downside I'm not thinking of? I guess we'd need 30%if it's a buy to let mortgage (is that right if our child lives there too?).

Also, I'm using a revolut account for savings but I dont want a long term place as we dip in and out. Is there a better rate to be had anywhere for that type of instant access account?

 

[Greenbook]

I would not recommend buying until shortly before your first child starts college or if you buy well before, leave it vacant.

There are way too many horror stories out there of parents who buy and rent out the property, but when the time comes for the child to move in, the tenant won't leave. I've heard that some children have had to delay starting college because of this. There could also be an eviction ban in place, another risk.

Overall it is a good idea though presuming all your children will be going to University in the same city. If at times you only have one child in college, that child can do rent a room on the second bedroom.

 

[Steven Barrett]

when the time comes for the child to move in, the tenant won't leave

6 year leases now. They won't have to leave

 

[Brendan Burgess]

Mortgage on family home: 310,000 left over 23 years

Interest rate:2.1%
Type of interest rate: tracker, variable, fixed: fixed until late 2027

It's a very interesting question. Normally, the advice would be to pay off the mortgage. But this does not seem right in your case as you have a cheap mortgage and you have a plan for the money - a deposit on a property.

Bank savings, around 40,000

A two bed older type flat would be around 270,000.

So you will need 30% or about €90k.

So you have a €50k gap to bridge over 2 to 3 years.

The idea of buying a property is a good one. Much cheaper than renting and you have control over it.

Fully agree that you should not buy now
1) it will not be available to you when you need it so that is pointless.
2) They may not study in the town where you buy the property

You should save hard to get to about €100k

When you know where your eldest is going to College, then you can decide if it's right to buy there. If they are going to study in a city where your next two are unlikely to study, then you probably should not buy.

Although property transaction costs such as legal fees, stamp duty and selling fees are comparatively low, so you could consider buying a property and then sell it if your second eldest does not go to the same city.

But that is down the line.
Be flexible - save as much as possible for the next two years.
Then revisit the issue when you know where your eldest is going.

 

[Cathbarr]

Id love to know how how you can save 5k per month with 3 kids and a mortgage? Fair play to ye.

 

[Super Sesame]

Were fairly frugal on outgoings. Bare minimum subscriptions. Loads of solar panels and two ev cars, so very low electric costs and no petrol, my yearly insurance on my car is 310 and tax 120.
Try to plan meals better and shop once a week. Used to be the in and out of shop buying extras we didn't need.
5k would be max saved a month, but this month had oil tank fill and bin charges so not close to that!