Overpay mortgage or invest in house?

[prettygreenteacup]

33 years old, approx 156k left on mortgage. On a low fix that ends in 2026.
I have about 20k inheritance and also plans to have a baby in the future with partner. It's currently a 3 bed house but we were considering doing a loft conversion to accommodate baby plans, as already have my two DD's in their own rooms. Realistically I don't want another baby beyond 36.

We have the capital to do the loft conversion without borrowing any more.

Is it wiser to overpay mortgage with what we have or invest in the loft conversion? I am torn between my age, the low interest rate of mortgage, the desire to have another baby and rooms in the house. Advice?
Together we could probably knock the mortgage down from 156k to nearer 127k.

Personally I would not have another child, but if you are definitely doing that, go for the extension or you will be on top of eachother

My advice would be that you call them your partner so I am presuming not married but are considering a baby and sinking your £20k into the house.

do you have a tenants in common agreement? Will your earnings decrease if you have a third child?

I would soundly sort out your financial and legal standing and protection before spending inheritance or having a child.

sorry that’s not the answer you were looking for. I am also intrigued to know peoples advice as I have a invest in house or pay off more mortgage debate going on but I was drawn by the other ‘issues’ I saw in your post so those comments are asked with kindness

We have plans to marry, which would happen before another child. I wouldn't have a child if we weren't married.
We are tenants in common and have a deed of trust in place.
We would happily alter the deed of trust if I were to put any inheritance into paying off the mortgage.
I wasn't really after "be sensible" advice , I know full well that being married is the better option for child and house/finances.

I would do the loft conversion for more room of you're having another child. I would do some research into the cost as it may be far more than you think though. Costs are ridiculous at the moment. Possibly as high as £100k.

Don't overpay the mortgage while you're on a low fix. You're throwing money away.

Save the money while you decide what to do, you'll get far more interest, plus it will be available if you do decide to do the loft conversion without having to borrow it back at a higher interest rate.

Agree there's no point in overpaying right now as savings rates outstrip a low mortgage. I've heard that building work is crazy expensive right now so I'd probably keep it in savings for a bit and get quotes for the loft and be prepared to hold off on any final decisions.

Is £20K enough for the loft conversion? Building quotes are sky high at the moment…

A loft conversion, if done properly, will add far more value to your home than overpaying your mortgage in the short term, I think. When I say done properly, what I mean is, add some proper standing height. I've seen so many loft conversions over the last few years where they have done it as permitted development which means not increasing the ceiling height, and although they're passable as bedrooms, you can barely stand up to your full height for most of the room. Perhaps people in a pinch will buy a home with a conversion like that, but not on my life would I.

Someone else said building costs are silly at the moment, which is correct. My cousin currently charges £75,000 for a two-storey, four metre wide house extension (bricks have gone from 80p to £1.86 in two years). The numbers are mind boggling. Used to be you could get a permitted development 15x15ft single storey extension for 20k, they're now 44k +.

Idk re: conversion costs I am afraid.

There's a glimmer of hope down the line: the government are being forced to relax visa rules for building trades because we have a massive shortfall (can't remember all trades, but brickies and carpenters were included). With any luck, an increase in the number of people available in those trades will bring prices down some time in the medium term future.

Personally, I'd shove it in the highest interest ISA I possibly could and wait to see if prices come down. But obviously, you are time limited if you want to have another baby.