It's really not worth doing an extension or loft conversion on House 1 - the road just isn't desirable enough for us to make the money back on it.
And yes we would be more tied to House 2 but then we'd be happier to stay there for longer.
In both scenarios we could overpay on the mortgage AND still save some cash each month... Just that House 2 would require more of our leftover savings and House 1 well it just sit in savings for a rainy day or the next house.
I'm concerned that the gap between what we'd sell house 1 for (despite being able to keep saving) and what we could buy our next (and hopefully forever) home for will increase as time goes on and we'll be "stuck" in House 1.
I would go for house one. Firstly for the safety of having savings left and as we know in this economic environment having that safety net can be very very useful. Also it will allow you save hopefully and when you look to move again you never know your dream house may come up. I just feel from what you have said you will be really tied to house 2 if you go for it. In that it needs a lot of work, these things can be money pits! I would def go for house 1 for that little extra safety net and future flexibility.
I would go for option 1 with the possibility to extend or do a loft conversion to make bedroom 4 in the future. We have just done the new roof, rewire, replumb etc it is a nightmare especially with DC's and takes so much longer and costs so much more than expected
I would go for house 2 as it would give you more space for longer plus it sounds like it would be a better investment if you do the work, and you would get more for it if you do sell in a few years. And I would find a more local nursery for your child.
Prompted by another thread, just wanted to ask a "what would you do" question?
We've been house hunting for a year now and getting fed up with it. Just seen 2 houses that are v promising but quite different:
House 1 - 3 bed mid terrace, outskirts of our preferred area, 5 min walk from DD's nursery, ok parking, needs very little work (just cosmetic throughout). Very affordable, with 25% deposit we'd have plenty of our savings leftover, low mortgage payments etc. Good school catchment. We're planning DC2 and I work from home so once I was back at work after that 3 bedrooms would be a squeeze... But we'd probably want to stay put until DC2 was in the same school as DD as all primaries are massively oversubscribed. Will never be our dream home but could afford to keep saving and still have good chunk of savings leftover. Not massive likely to rise in value but over 5-6 years we should get a little profit. But what if we don't save as much as set out to?
House 2 - 4 bed mid terrace, middle of preferred area but 25 min walk to DDs nursery, ok parking, a different but equally good school catchment. No need to move anytime soon as 4 beds. But - needs lots of work - rewiring, replastering, new heating, new windows, new carpets and decoration throughout. Looks like there's a fair bit of damp. So a big project... It's a bit more expensive than house 1 but still doable but would mean all our savings would go into the work... But we could take our time as this house is for the longer term... Whether it would our dream forever home I don't know but as its a better location it's value is more likely to rise over time so could be a better all round investment. But we're FTB and whilst DH is a tradie, we're totally green to doing up houses.
So I guess the short question is should we go for a shorter- term easier buy or stretch ourselves more for a longer-term house even though it will be a lot of work?