To abandon the extension?

I’d definitely do the extension

I completely understand your worry about feeling trapped if you've put the money into the extension and then still don't really like the house. In your position, I would be inclined to have a couple of estate agents in to value the house with and without the extension. If they are in agreement that you would easily get your money back from the work you plan to do, then go ahead and do it and enjoy it for as long as you're there. It will make your life easier on a day-to-day basis. But you won't have that feeling you can't move in the future because you have put yourself into negative equity with the extension.

@Extendorsave if you want 4 children then don’t underestimate the added value of a downstairs toilet! Worth its weight in gold as they grow up and hog the bathroom. It will also appeal to future buyers.

It sounds like you are worried about spending so much on the house because maybe you are worried that you still won't like it after?
I think if you don't want to spend on the house, you pay the money back towards the mortgage and then save the money that the payment is reduced by to spend on holidays. That way, you're only spending your own money on holidays, not money that you actually owe towards your house long term.
For me, I had a few (minor) things I didn't love about our home that made me want to move. I looked online to see what was actually out there, and I realized that it wasn't worth moving for, nothing is perfect and what we have is the best option. So then I decided that instead of disliking our home, I needed to do what I can to make it work the best it could for us, and make it a home for my children rather than just a house.
Looking at your floorplan, I'd definitely want to at least open the kitchen into the dining, but I think more living space would be amazing especially if you go for 4 children. We have 4 and that wouldn't be enough space for us in terms of living areas.

That's a massive mortgage for that income and still paying nursery fees, especially if you're planning more kids. You need to look at this as a longer term cash flow question and work out when you need the money for what. You'll have some key things you want to achieve so this is about having the cash needed to hit those goals when you need it.

Personally I'd look at putting in a garden room with some of the money then putting it on Airbnb using the separate entrance (if you can). Put that extra income into savings or use to overpay the mortgage dependent on rates. Knock together the rooms in the current house rather than extending to save money and add the balance to the savings pile. In a few years time you'll have a bigger living space needed from the garden room and the mortgage won't be so bad so you can put surplus towards holidays.

Do the house. Or use the money for an investment property. I had a similar amount and blew it on holidays... now regret and wish we'd done the house.

You are paying interest on that money why would you spend it on holidays? Either do the renovations or party it back off the mortgage

I have a drier stacked above the washer to save space, and a shelf above that with the washing powder, dishwasher tablets etc., out of reach of small hands. Seriously OP, the extension would make such a difference to your lives

you'll appreciate a seperate laundry as your kids get older

Moving wouldn't guarantee you a brand new kitchen/the perfect space. Better to do it yourself, get the benefit of it being lovely and new, and configuring everything exactly how you'd want it. Plus it's an absolute nightmare to move, and you'd have other expenses to consider like legal fees and moving costs.

So something a bit like this along the short wall (depending how easy it is to get water/drainage). Hidden in low cupboards with a nice (not too kitcheny worktop above). I have lots of photos etc on the wooden top and chose doors which are more living than kitchen. https://www.digsdigs.com/how-to-hide-washing-machine/pictures/95984/

If you don't use the conservatory much you might as well put utility space in there but make it look nice so you can still have a chair etc to sit in. I much prefer being able to fold my washing on a sofa! We ditched a cramped utility to open up the space into a proper room because it was so small it was horrible and ruined the space next to it.

You just need 60cm of depth and a run of at least 120cm if you want a washer and a dryer.

The snug doesn't necessarily need to be separate but a corner of the family space with comfy chairs. Somewhere you can be when the kids have friends round and your TV has been taken over by Fortnite or monotone you tubers.

£60k does seem cheap for all that.

We’ve been quoted £50k to knock through kitchen and dining room, build a downstairs loo and pantry some other works. Add onto that the cost of the kitchen and all the fittings, and it will be £80k without an extension.

We are in a Victorian terrace and would like to do the side return but it’s just unaffordable.

It doesnt matter whether the interests rate are the same of the mortgage: it is money you do not own. If you are not going to use for an extension, you must pay it back.

whether or not you are making the money back is a moot point because 1) it would sell quicker and potentially people will bid against each other and 2) you said you dont want to move in a long time so if you move in say 15/20 yrs time when your kids are at university, then you would have made your money back. Investing in long term and investing in your everyday life is the best yoy can do. The returns are just not financials but also practicals.

spending money you do not have on holidays os a recipe for failure and really not financially savvy

Of course you should build the extension. Even a small one makes all the difference when space is at a premium.

I'd definitely do the extension. Sounds like you need a new kitchen anyway, which isn't cheap. Otherwise I think you'd regret it in 10 years time (I speak from experience - we redid our kitchen which was hugely expensive as it uncovered a lot of issues that needed fixing, and now really wish we had extended at the same time).

Also I think you'd save money if you have a decent open plan space and that allows you to host kids birthday parties at home.

I wouldn't worry about a ceiling price if you plan to live there long term. You'll likely gain value and even if you don't gain much, the £60k investment will be enjoyed over the next 10-15 years.

Finally if you were to spend the money on holidays that would cause another problem as you'd get used to a fancier standard of holiday and then have to row back when the money ran out. Keep to what you are used to! (Although if you are thinking of having 4 kids it's surely going to be very expensive to go abroad with them all?!)

Surely if you've borrowed for an extension then the loan has been given on the potential new value of the house when extended. If you simply spend the money you'll be in negative equity which is not somewhere you want to be really.

We're in a similar position, trying to decide whether or not to proceed with building work. We've lived in our home for 30 years and have grown very comfortable in it. While the location and views are truly exceptional, we're aware that the way we live doesn’t align with what buyers typically expect in this area and price range.

The house has five bedrooms but no en-suites, a small 10' x 7' kitchen, no utility room, and the white goods are housed in the garage. Although there's plenty of land, there's no paved outdoor seating area and the garden is in need of landscaping. We have planning permission for a large single-storey extension and some external improvements which would finally give the downstairs space the wow factor it’s currently missing.

The dilemma is this: when we factor in both the overdue maintenance and the cost of the planned extension and landscaping (250K-300K), the total investment may well not match the value it would add to the property. Even then, we’d still face the issue of selling a large house with no en-suite bathrooms, something that seems to be a must-have for most buyers these days. Converting one of the bedrooms to create a couple of en-suites is an option but that would mean additional costs for remodeling the upstairs. We sometimes wonder whether it would be simpler just to do the backdated maintenance, live in for another 20 years and when the time comes to sell, market the house as a project for someone else to enjoy.

I think some extensions are brilliant but in your particular circumstances to gain only a utility and lose all your outside storage, I'm not sure it stacks up.

You'd still need to reconfigure and an extension, new kitchen and potentially doing structural work is not going to come in at 60k.

Why don't you write a priority list of what you want to achieve and then consider what can be achieved in other ways e.g does a tumble dryer need a dedicated utility or can we utilise other space? And what can only be achieved with significant changes e.g I want an ear in kitchen or an open plan family space.

Your downstairs is quite large, it's just not being used particularly well.