At 35 with a mortgage and two children, your financial picture has grown substantially more complex. You now have people who depend on your income — which fundamentally changes what your financial priorities should be. Protection comes first, not investments.
Your Profile at 35 (Mortgage, Two Children)
| Typical situation | |
|---|---|
| Gross income (combined) | £60,000–£90,000 |
| Mortgage | £180,000–£280,000 remaining |
| Children | Two, likely under 10 |
| Pension | Workplace pensions, possibly under-funded |
| Savings | Emergency fund (hopefully), some ISA |
| Protection | Often inadequate |
| Will | Often not written |
Priority 1 — Life Insurance (If You Don’t Have It, Stop Reading and Get It)
If you have a mortgage and children and no life insurance, this is the single most urgent action in this guide. Life insurance at 35 is cheap — typically £15–£30/month for a £300,000 level-term policy over 25 years for a non-smoker in good health.
What to get: Decreasing term insurance (mirrors your mortgage balance — cheapest option) or level term insurance (pays a fixed lump sum — more flexible). Both parents should have separate policies.
Why it’s Priority 1: If you die without it, your family loses income, potentially the house, and the ability to afford childcare. This risk is so catastrophic and the cost so low that it overrides everything else.
Note: If you have death in service through your employer (typically 4× salary), this reduces but does not eliminate the need for personal cover — it ends if you change jobs.
Priority 2 — Income Protection Insurance
Life insurance covers death. But you are far more likely to be off work for 6+ months due to illness or injury than to die before 65. Income protection insurance pays 50–70% of your salary if you can’t work.
Check what you have through your employer first (company sick pay periods). If you have only statutory sick pay (£116.75/week in 2026/27), income protection insurance is essential with a mortgage.
Priority 3 — Will Writing
Without a will, England and Wales intestacy rules apply. For married couples with children, this distributes assets in a legally fixed way that may not match your wishes. For unmarried couples, the consequence is severe: your partner inherits nothing automatically — everything goes to children or other relatives.
A basic will also lets you appoint guardians for your children. Without a named guardian, a court decides.
Cost: £100–£300 for a mirror will (two complementary wills for a couple) with a high street solicitor. Online regulated services cost £50–£150. This is not a large sum against what it protects.
Priority 4 — Pension Review
At 35, you have roughly 30 years to retirement. Money invested now is worth approximately twice what money invested at 45 achieves (at 6% growth). The target at this stage: 15%+ total (employee + employer) of salary into pensions.
On a combined household income of £75,000:
- Target pension saving: £11,250/year
- With employer contributions of 5% each: £3,750/year employer total
- Personal contributions needed: £7,500/year = £625/month combined
- Tax relief means this costs approximately £500/month in take-home at basic rate
Pension vs mortgage overpayment: Pension contributions attract 20–40% tax relief. A £100 pension contribution costs you £60–£80 in take-home depending on your tax band. A £100 mortgage overpayment costs you £100. The pension wins on efficiency in almost all cases.
Priority 5 — Childcare Cost Optimisation
Childcare for two children is likely your largest monthly expense. Make sure you’re claiming everything:
| Scheme | Benefit | Eligibility |
|---|---|---|
| 15 hours free childcare | From 9 months, term-time | Both parents working |
| 30 hours free childcare | £5,000–£7,500/year value | Both parents earn under £100k each |
| Tax-Free Childcare | Up to £2,000/year per child | Both parents working, each earning under £100k |
| Child Benefit | £1,331/year first child | Household income under £60,000 for full amount |
Warning: If either parent earns over £100,000, you lose all 30 hours free childcare and Tax-Free Childcare. Pension contributions that reduce your adjusted net income below £100,000 restore these entitlements — the pension contribution effectively pays for itself.
Priority 6 — Mortgage Review
With two children, you’ve probably not refinanced since rates changed. Check: is your current mortgage rate competitive? Every 0.5% on a £250,000 mortgage is £1,250/year.
Overpayment decision: If your mortgage rate is 4.5%+, overpaying 10%/year (the standard allowance without penalty) reduces total interest significantly. On a £250,000 mortgage at 4.5% with 20 years remaining, a £500/month overpayment saves approximately £40,000 in interest and clears the mortgage 7 years early.
Worked Example — Emma and James, 35, Household Income £78,000
| Current | After review | |
|---|---|---|
| Life insurance | None | £25/month each (2 policies) |
| Will | Not written | Written, £200 solicitor |
| Pension | 5% personal, 3% employer | 8% personal, 5% employer = 13% total |
| Tax-Free Childcare | Not claimed | £167/month saving (£2,000/year) |
| 30 hours childcare | Not using | £400/month saving for second child |
| Monthly position | −£200 deficit | +£400 surplus |
The childcare claim alone more than offsets the increased pension contribution.
Related Guides
- Money Advice by Age UK 2026 — What to Prioritise Every Decade
- Financial Planning by Life Stage — All Situations
- I’m 40 With a Small Pension — How to Catch Up
- Child Benefit 2026/27 — Rates, Eligibility, and the High Income Charge
- How to Write a Will Without a Solicitor UK
- The £100,000 Income Tax Trap Explained