To abandon the extension?

[Extendorsave]

Just after some opinions really as DH and I can't decide what to do and are after some Mumsnet wisdom.
We bought a 1930s semi 2 years ago with the intention of doing an extension. It's a 5 bed semi (2 rooms in the loft) but it needed loads of work. It currently has a small old kitchen and separate dining room, it feels small downstairs. Our plan was to knock through, get a new kitchen and build a utility on the side. We've been quoted about 50-60k for this. We borrowed the money as part of the initial mortgage, planning to do it quicky and have it in a high interest account.
We have 3 kids aged 8, 5 and 2, and planning one more possibly.

As time goes on I feel like we would be better off keeping this money. I imagine all the lovely holidays it would cover, and possibly helping the kids through expensive phases. We are not struggling for money, we can afford a basic holiday every year, but the extra money would mean nicer holidays, maybe extra trips, the ability to not worry about money and buy things we need. Or we could even pay off some of the 380k mortgage!
We also have an additional 30k in savings if that makes a difference, which is our back up money as DH is self employed, so it will remain untouched.

My DH thinks we should do the extension and prioritise making the house nice to live in, I am having doubts as I'm not sure a side utility will make a huge amount of difference to our lives but I do see how much nicer it would be to have an open plan space for having friends over and spending more time together as a family. I don't think it would add much value we there is a ceiling to houses in our road. We might not make it all back if we sold and ideally we don't want to move for a long time.

Anyone had a similar dilemma? What did you do?

I have three grown up sons, when lockdown began 2 of their girlfriends moved in and apart from my eldest son we were all working/ studying from home, I was very glad of the large kitchen/dining/utility room extension we had built about 15 years before. They have all moved out now but still very glad of the space when they all come for weekends etc
It has also cost a fortune to help them all out with Uni / house deposits / Cars / weddings, I would think more carefully about having another child than getting the extension done!

In other words you’d be putting holidays on to a secured loan ie converting holidays into brick and mortar of mortgage? Batshit doesn’t cover it

I love Love It or List It too but in the most recent series quite a few didn't make what they'd spent back in increased value. In fact one lost substantially.

Building costs have rocketed so it is important to be realistic.

That said in the latest series someone did do something good with a conservatory as a utility room so might be worth a watch..

I would do it. We were in a similar position (the money for our extension was in savings but we debated for a few years about whether to go ahead or keep the savings). Eventually did it and honestly have no regrets, it is such a nicer house to live in and we plan to be here for a very long time. It didn’t use all our savings, which helped- but sounds like you also have savings you won’t be touching?

Dear god OP, you don’t understand how the compound interest on your huge mortgage actually works, do you? Go onto chat gpt and ask it to teach you.

you cannot compare funds in a savings account vs funds being paid off a mortgage. Maths doesn’t work like that.

the fact you have a massive mortgage and are considering frittering this money away on holidays is frightening, have you no financial sense at all?

oh and there is no way that extension is going to cost £60k if you’re in the south east, it’s £100k.

Yes I do understand. If you looked at my later post you'll see that it wasn't an extra loan, it was profit from a previous property sale that we decided to keep in order to do the extension.
But having the money sitting there has made me question whether I want it to all go into a house.

One thing I find amusing is that noone ever questions someone spending large sums on holidays if it's from savings, and just says 'if you can afford it do it' but those people probably have mortgages that need paying off too, surely none of us should ever go on holiday and just focus on paying off our debts if we are being financially savvy. Very few people at our age are entirely debt free.

I think YWBU not to do anything, looking at your house it looks like a good size and you’re never going to find a perfect place.

That said looking at the floor plan I would be tempted to do something a bit more ambitious, and especially to end up with 2 areas for TV watching downstairs if you’re planning 4 kids. The below pic is something I might think about and is unlikely to cost that much more (might take a while for pic to load).

This is a fab idea, thank you! I wonder how much it would be to go out the back by that much, I'll need to get another builder round I think.

I've just been thinking, we could potentially have stairs going down into the rear extension, that would probably save on the added cost caused by being on a slope.

Do you have a cellar?

Only my humble opinion but I'd rather never have a holiday if it meant having a beautiful home. I vote extension.

No we don't.

It’s a balancing act as it is with everything in financial planning

I think you need to decide between adding value or making the property more comfortable to live in. These are two separate decisions. I have a utility room and wouldn’t buy a house without one. I assume also that you are planning to knock through the kitchen and dining room. I don’t think you would regret it.

As for having borrowed 50k and to spend it on holidays is madness. It’s like buying a new car and financing it over 25 years.

Definitely do the extension. The extra space will give you much more in terms of quality family life than an extra holiday.

You’ve borrowed extra money as part of your mortgage and instead of using it for the purpose you intended, you want to use it for holidays etc? Words fail me. You’ve borrowed this against your home, why on earth would you want to fritter away the money? Common sense has gone out the window. No one borrows £60k and wastes the money like this, why would you waste your money. Either use it for the intended purpose or pay it off the mortgage and reduce your interest.

I love how the OP has gone from clearly stating that they borrowed money (in such clear words) for an extension to then changing it to they didn’t borrow money at all and simply have held back savings for an extension.

I think OP has made it clear that she hasn’t borrowed the money as such, rather just kept back £60k of her savings (from equity in a previous home) rather than ploughed all
her savings into the current house purchase. This means her mortgage is more than it would have been, but a lot of people don’t put every penny of their savings into a house purchase.
we did the same when we brought our current house, held back some savings so we could have a buffer and also do work to the house. It’s a common tactic, not sure why people are being aggy about it!

OPs original post said:

We've been quoted about 50-60k for this. We borrowed the money as part of the initial mortgage, planning to do it quicky and have it in a high interest account.

This is where the confusion comes from.

Later on OP says:

I think I might have accidentally misled people with us borrowing money to do the extension.
When we sold our flat we had a fair bit of equity, we then rented for 6 months.
When we chose to buy, rather than putting all the equity back into the next property, we kept some back and therefore borrowed more than we needed, with the plan to extend. So I don't think this would leave us in negative equity?

Which is a different situation.

I didn't intentionally mislead people, what you have quoted is true. We borrowed 405k at the time, but we could have borrowed 345k.
We put the additional money in a high interest account with the intention of starting work on the house fairly soon.
Some of it has been spent already on rewires and plastering and all sorts of other things, although we absorbed some of that with our regular income as it's been gradual over 2 years.

The reason I felt the need to clarify that we had chosen to 'hold money back' and therefore borrow more, is because there was lots of concern about negative equity in the responses, which is very valid concern, but isn't relevant to us. I'm not particularly sensitive about being called stupid or batshit and some of the responses (even the harsh ones) have been helpful, but I think there's a big difference between spending money that could put us at risk of negative equity and spending money that is essentially profit from a previous sale.

What has been really useful about this discussion is it's made me look at the overpayment calculator on my mortgage app which was quite mind blowing.

I think you’re getting a bit of a hard time in the comments. It was clear to me you had borrowed at a different LTV to have the money to use for possibly an extension. Not overborrowed on the house! And it’s sensible to ask whether it’s worth using that on a small side return utility, when this might not add much value to your house so essentially be a waste. Especially as you mention not being sold on the house and would like possibly different things as the children grow.

In my opinion that wouldn’t be worth it (for me). I’ve just finished an extension on a property on the hill - the hill added about another £12k in costs for deeper foundations/more concrete. This was for a full back extension and has definitely improved the house and how we use it. Going open plan has really improved it also with young children. But you can add sliding pocket doors so rooms can be open and then closed off when needed.

Looking at your floorplan, I would either:

1. get a quote for the full back extension with roof lights. As long as this doesn’t take you over the ceiling price. But this would add actual value I think.
2. ask a builder/structural engineer about costs for removing different walls/what steels would be needed etc. To remove one of our walls would have needed about £7k of steel, the other wall was about £1k of steel for example. Use this to strategically plan how to reconfigure.
3. if the side return is just for a utility and storage, could you consider a proper enclosed side return lean to? This would be much cheaper, you’d keep your kitchen door into it, and you could have your washer and dryer stacked in cupboard, make a boot room area, a storage area etc

Otherwise if you have a decent LTV I would actually use some of it for experiences. Not the whole £60k, but those experiences and memories with my children are important to me and would be more important than a utility (and I love our utility room)

Also, just to ask, was your ideal house that you mention detached? Are there other things you don’t like about your house that can’t be changed? If that’s the case, I would be very strategic with improving the flow and layout (seeing what's cheapest etc) and making it nice for you for a few years. But also appealing for buyers so you can sell it quickly if needs be. If it’s just the layout being top heavy that you don’t like, then given how much the stamp duty would be to move a step up, I’d be inclined to try to get a bigger extension

Thanks for your really helpful response. A lean-to could be an option and then just a knock through. I will definitely investigate the costs of a rear extension.

Over time I've become attached to this house and it's quirks and features. But there are aspects that I don't like that can't be changed. Even if we extend out the back, we would lose some garden and I wish the garden were bigger and south or west facing.
It has no driveway and due to the very sloped front garden, we couldn't create one. So we park on the road (although there is potential to create parking at the back by losing a bit of garden). it also doesn't have a garage and just generally lacks space around it. Detached would be ideal but possibly out of reach for us in this area.

Having said that our house has lovely neighbours a great location for amenities/park and a beautiful view. A view round here is very unusual and I love it. So I think if we could adapt the house enough, we could probably make it work long term and appreciate it's positives, but I'm not certain enough on it right now to say 'yep this is the forever family home'. That uncertainty makes decisions quite hard.

I’ve had this thought all the way through this thread? Why do you want a 4th child OP?
What will a 4th give you that you don’t have with 3? Obviously having another means you’ll presumably be less likely to be able to give the same opportunities to the 3 you have.

£118k to me is a good salary but im not in the UK so difficult for me to judge. But your husband is self-employed which as far as I understand it always carries more risk.

I think children are a huge blessing. I absolutely adore family life, as does my DH. He's one of 4 and the bond is unreal. None of them were bought cars or weddings or houses. I'm always a bit baffled when people say 'what will one give you that the other don't'. Each child is completely unique, it's impossible to tell what they will bring until they come along but I strongly believe nothing beats bringing a new baby into a family and getting to know a new little person.
Having said that our limit would definitely be 4, (unless we had twins) as I think we would struggle to meet their needs if there were more.