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Original poster

Extension vs Saving/Paying off mortgage

29 replies

emma16 · 28/03/2018 18:03

So, a bit of a dilemma which i know isn't really a first world problem but just need some advice from others.

My DH & I have saved £18k up over the past 3 years via his share scheme at work (£500 a month which we will now get back starting in May pay packet) in the hope we would make some money but unfortunately not...we get back what we put in tho.
We'd always thought we would just bank it and use it to pay off our mortgage at some point or when it got right down.

DH brings around £3700 a month home after £600 going into his pension, i earn £800 a month working part time. We owe around £109k on a house worth £238k with a 12 year mortgage. Kids 15 & 10.
They reckon in around 10 years redundancy's are possible where DH works as plant life will come to an end, so he always has this in his mind financially and to ensure we are mortgage free by then.

Now i have been looking at getting some quotes on an extension on the side of our house which would provide another living space of approx 5m x 5m joined on to large kitchen space.
I don't want to waste our £18k or have it just sat in a savings earning practically nothing so the idea of investing it into our home where we also benefit from it, is a good i think??
We have around £7k in savings ourselves in the bank and by the time it came to it we could have £30k saved up and borrow around £10k on the mortgage.

What would you do in our circumstances? Bank it and sit on it, or extend and add value plus gain some enjoyment from your hard earnt?

OP posts:

Kmetsch3 · 28/03/2018 18:07

Extend!

Prtf1345 · 28/03/2018 18:10

Pay off the mortgage, then extend

Original poster

emma16 · 28/03/2018 18:12

Prtf1345 can I ask why? If we stuck to our mortgage term i would like to think our kids have flown the nest by then so the extra space wouldn't really be necessary. Is it not better to have the extra space now whilst they are growing into adults and at home until lord knows when?
I am genuinely interested to know the reasoning behind your answer :)

OP posts:

JoJoSM2 · 28/03/2018 18:47

How old are you? Unless you had children in your 40's and are now in your 50's, I'd probably extend. The conditions under which I'd extend are the house being a bit too small for your family and the cost of the extension being less than the uplift in value of the property (so you aren't pouring money down the drain).

JoJoSM2 · 28/03/2018 18:48

I think where prtf is coming from is looking after security first before spending on indulgences.

Original poster

emma16 · 28/03/2018 19:20

I turned 35 last month and DH is 41 :)
So plenty of time in front of us, hopefully! I think it would be difficult to know for sure how much value it would add on to the house, we are a 4 bed detached on a quiet estate at the head of a cul de sac on a corner plot so we know that any kind of improvement work wouldn't be lost money.

OP posts:

JoJoSM2 · 28/03/2018 20:55

You are very young then. It'd be easy to extend the mortgage for lower repayments if your circumstances should ever change. However, 4 bed detached sounds plenty big enough for a family of 4.

Have you considered investing the money elsewhere? It sounds like you might not have much of a pension building up (being part-time on low income) and things like a lifetime ISA could be a wise investment.

Prtf1345 · 28/03/2018 23:59

Sorry for the late reply, basically what Jojo said. Security before indulgences.

Then again you are young enough and the space would come in handy, I think I was just coming at it from a point of view where I indulged on what I wanted and not something I needed- house renovations- and do wish I had put it away/paid mortgage off. It’s a smarter move and you’ll end up paying less interest, have more safety etc but do what you want to do. It seems like you’ll be ok either way!

Notreallyhappy · 29/03/2018 15:28

Over pay on the mortgage first. ..bear in mind you may only be able to pay a % . Then extend.

Original poster

emma16 · 29/03/2018 16:08

Yes I totally get the whole paying towards the mortgage to get it paid off but if we did that then we wouldn’t have any money to extend until the mortgage was paid off and then we would have to wait whilst we saved up enough if not borrowing on the mortgage.
By which point I will be around 50 and our children will have flown the nest and all the extra space won’t be needed.
I have a very small pension pot and in th next few years once my youngest has gone to high school I will be changing my career and going full time so will set up a pension contribution of 10% then and carry on until I retire. What with my husbands really big pension, this side of things doesn’t worry me.
We have been quoted £23k for the whole lot, start to finish including labour and materials. That’s to leave it with velux windows, doors opening into garden, electrics, plastering done.
We can pay that out of our own money without borrowing and after talking to someone today it would easily add the same value onto our house.

OP posts:

JoJoSM2 · 29/03/2018 18:24

Sounds like you'd really like the extension. Just go for it.

Want2bSupermum · 29/03/2018 18:27

I'd be carefully looking at the extension and assessing what value it brings to your home and your life. For what sounds like a small extension I'd be wary of incurring the expense and would favour paying down the mortgage.

afrikat · 29/03/2018 18:29

I think if you really want the extension and it would make you happy/make your house easier to live in then do that. We've just spent some money renovating downstairs and it's amazing how much better the house works for us now and we are so much happier here

Stillgameforalaugh · 29/03/2018 18:29

We are very similar... mortgage of 120k on house worth around 210. We have 10 years left on mortgage and are trying to decide whether to move to the next band up...so adding 100k onto mortgage or extend at around 70/80... or just carry on as we are and pay it off.

Wilma55 · 29/03/2018 18:32

We waited till mortgage almost paid then borrowed (offset mortgage) the money for extension. We were late 50s. I wish we'd done it years ago and we would have had the benefit for longer. However I was really wanted to clear the mortgage before taking on more debt.

RealityHasALiberalBias · 29/03/2018 18:37

23k sounds very inexpensive for a 5m x 5m extension. Is that a firm quote?

Original poster

emma16 · 29/03/2018 19:07

Yes it is, we live in West Yorkshire in a small ex-Mining village and work round here isn’t expensive at all. The builder is a recommended guy who’s work we’ve seen and is part of the BNI group we’re in so he is legitimate etc.
I’ve spoke to the estate agent we used to buy this property and they’ve said if we were to put it on the market after doing the extension then we could add £20k onto what it’s worth now.
I know it doesn’t seem a large extension but it would be going onto an already existing kitchen that is 18’9 x 17’6, one part of a wall would come down and there’d be 1 step down into this wrap around living area so it would make the whole area a lot larger and appealable.
Lord knows how long the kids will live at home so I am thinking of the 4 adults plus 2 partners in the future, occupying the space in our home.

I do really love the idea of it especially leading out onto our large garden, but I’m really open to peoples advice. We’ve saved £500 a month for the last 3 years so we want to ensure it’s invested wisely and given I’ve still got 30 years left to start contributing back into my pension pot, we don’t want to put it towards that.

OP posts:

TalkinPeece · 29/03/2018 20:57

Extend
make your forever home
then focus on the mortgage

Want2bSupermum · 30/03/2018 00:08

You are paying more for the extension than what the value increase in the house. Globally speaking we are going into a rising rates environment and you know your OH is going to lose their job in the next 10 years.

If you pay down your mortgage you get an immediate return of whatever your rate of your mortgage is. Also, that quote for such a small extension is expensive. The actual base cost to do it is about 8-15k depending on how fancy you want to get with finishes and it doesn't sound like it's going to be fancy. I'd be expecting quotes to be coming in starting at about £15k and explaining what extras you can pay for the upgrades.

You sound like you really want to do the extension. Would you be able to start your new career sooner so your income is higher and you can pay down the debt?

TamaraDrankMyMilk · 30/03/2018 09:57

I would do the extension, we did a kitchen extension and converted a double garage into a playroom for the children. It was all paid for out of savings, no extra borrowing.

It was life changing. We have benefited from these for the last 6 years.

I have friends who are over-paying their mortgage but have no life, no nice holidays etc. But by the time their mortgage is paid off the children will be almost 20 and possibly not living at home or going on holidays/day trips/city breaks with their parents.

We are enjoying our time with the children now and plan to downsize when they have left home as we are in a 4 bed house which we won't need then.

Planning for the future is all well and good but I have friends literally drop dead, including my MIL who planned her entire retirement only to enjoy it for 6 months before being diagnosed with cancer at 61. Live for the now with an eye on the future. Do the extension, benefit from the extra space.

JoJoSM2 · 30/03/2018 12:23

Lord knows how long the kids will live at home so I am thinking of the 4 adults plus 2 partners in the future, occupying the space in our home

Most young people would prefer help with a deposit to bringing their partners to live with mum and dad in their extended house. You seriously can't justify that extension as a way of helping your children. Just accept it for your lifestyle choice that it is and enjoy.

dingit · 30/03/2018 12:30

We paid our mortgage off, only to pay the same amount for Dds uni rent. Money never stops going out!

HundredMilesAnHour · 30/03/2018 18:37

You sound like you're fixated on the extension and not really wanting to hear that paying some of the mortgage is off is a better option. If that's the case, go ahead but don't fool yourself (or us) that you're interested in considering other options.

To me a 4 bed house sounds plenty for a family of 4. I'd pay a chunk of the mortgage off with the extra money. As you've said, your DH may lose his job in 10 years time and in his early 50s, he may struggle to find work again. You don't know what the future holds (especially given the current state of the economy). Your financial security should come first.

Original poster

emma16 · 30/03/2018 20:21

HundredMilesanHour see this is where the written word can be difficult to understand because you are wrong. Yes I would absolutely love to extend, but no I am not fixated on it as you suggest and am fooling other posters on here as you so nicely put it, because if that was the case I wouldn’t be asking for other people’s opinions.
I do understand both sides and I’m aware others can put across I different point of view or had an experience which they can pass onto me advice of, I take it all on board. After reading some people’s thoughts and opinions who are against the extension, we are talking things over about it all and going to sit on it a bit longer and see how we feel I think.

OP posts:

PissedOffNeighbour · 31/03/2018 17:11

I would do the extension - we did and it has transformed our house.

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