Extend/move/pay off mortgage

[Ohhelppp]

DH and I have been saving for years. We’re now in the position where we have approx £175k in savings currently in offset mortgage account. Originally we wanted to build an extension to add an extra bedroom and office space but quote for that is currently £280k all in. Much more than we expected and we don’t really want to borrow a substantial amount to do it. We’d envisaged possibly borrowing £50k and we’re ok with that. We’re arranging other quotes but our original builder is confident that that’s the price.
We have approx £160k left on our mortgage so we could pay it off but we have another rental property with a low lease that has a similar mortgage. We plan to extend the lease and/or sell in the near future.
We’ve been living comfortably whilst saving so could stretch ourselves a bit more financially but to truly move up the ladder we’re looking at paying £800k for a house. Our house worth approx £550k.
We just keep getting stuck and tend to make bad financial decisions - mainly because we never know what to do for the best and therefore leave things too late.

What is prompting all these big changes?

Do you need more space?
Is your home not in a great area?
Who else lives in your home? Children dependents etc?

Personally if I had lived for years and saved £175k I would be thinking early retirement and travel opportunities 😁

Oh sorry yes - essential info missed out 😆
We have 2 primary aged DC and need more space on the house as they grow. It’s also half finished as we did essentials when we moved in but didn’t decorate everywhere as we’ve always planned to extend. Resulting in a half finished house we hate. We never want to invite people round as it’s not a nice space. DH now wfh so needs an office. He hates his job so is also thinking about retirement but we’re 30 years away. Unless we keep saving and live in our horrible house for the foreseeable!

Do you like the area where you live now? Are your children happy at their school, and have they good friendships locally? If so then surely it makes more sense to at least tidy up your current house - you would have to do that to sell it anyway. The cost of your proposed building work sounds enormous - could you scale it back for now, just to achieve a tidy and more satisfying property?
I’ve just been through a major house renovation, (caused by a structural failure that I’m quite convinced was caused by subsidence, but of course the insurance company disagreed so I had to fund all the work myself). The house is a pretty large detached property, and involved rebuilding half of the house completely (joists, floors, external walls, internal walls - all pretty major stuff) and it didn’t come to anything like that amount. I project managed it myself, and managed the budget, and that got the cost down a lot. Admittedly building costs in the south west of England are cheaper than round London, but even in that area it sounds a lot. Keeping inside the building footprint is usually cheaper - for example converting the attic to a bedroom. I added a conservatory which has made a great play space for the kids, (it’s got heating in there too, and lots of opening windows for when it’s hot in summer). A great summer house sorted out additional office space - plus it’s quiet and away from family noise. There are lots of tweaks you can make that can make a huge difference to your quality of living. It sounds like you might be ground down by the half finished property, and that can really sap your energy. Are you considering moving to escape the situation? At present you are in a really good financial situation and it would be so easy to blow it. If you move to a larger property you will be hit by high stamp duty costs too, and that’s not fun. However if you don’t like the area then it may make more sense to move. But at the very least having fresh eyes to look at your existing house can pay dividends, even if you end up selling in the end. Personally I’d start with sorting out the current house - even on a basic level - and seeing how you feel then. It won’t be wasted even if you then decide to move as you should get it back on the sale price. In fact it’s probably worth asking a few estate agents round for a valuation, and seeking their advice how best to improve the house. Good luck with whatever you decide.

@Diorling I like where we live. It’s very convenient. DH doesn’t love it. And yes we would be moving to escape but aware we wouldn’t be getting everything we would get from doing the extension!
Thank you for your comments, really helpful.

If the extension is the dream, could you split it into several tranches - do one bit, then a bit later do another? Or is it a domino situation - can’t do A until B is done, and B is dependent upon C being complete? Sounds like you are feeling overwhelmed at the moment? If so split it into manageable chunks.

At least start with decorating - even if just living room and hallway. If the walls aren’t great then I’m a great fan of wallpapering the walls with lining paper, then simply emulsioning over the lining paper. A really good decorator gives you the impression of beautiful plastered walls with no joins showing. It’s fairly cheap to do and looks great afterwards, and you can ring the changes with a coat of emulsion. My living room has awful walls, and the decorator persuaded me to do that a few years ago. It’s been a game changer and folks are always so surprised when I tell them it’s just lining paper. Very often they don’t believe it so I show them the one tiny corner behind the curtain where it’s obvious.

If it’s kitchen units, and you don’t want to spend a fortune changing them when you might move, there is a company who will come and spray paint the units for you in the colour of your choice. They can also put in new work tops too. My neighbours just had it done, ( they’ve just moved in - it was a kitchen only 18 months old but they didn’t like the colour) and it looks great. Not sure how it will last long term, but so far so good.

You will feel so much better just doing a couple of rooms, and then might have enough energy to tackle the rest.

Go on Love It or List It on Channel 4? Or watch a few? Lots of similar situations so might give you ideas of how you could do the extension Vs moving