Would you take out another mortgage to finance an extension in these circumstances?

[HouseRenoOrNo]

We are thinking of doing a big extension to our house.

Currently, our house has enough bedrooms for everyone, although they are quite small and don't offer a lot of storage or space to put additional storage in.

We have a nice kitchen that fits our household in it adequately, but we struggle for space when we are hosting, which is something we really enjoy doing.

I'm saying all of this because I recognise that we don't need an extension, it's a want. We spend a lot of time in our house and get a lot of enjoyment out of it.

So my question is around the finances.

I'm in my mid 30s and my DH has just turned 40. We have aprx 250k outstanding on our mortgage and 25 years left to pay it off. Household income is aprx 120k.

The planned extension is likely to cost 150k which we would have to take out another mortgage on.

We are done with having kids and have factored in their childcare costs, so no upcoming maternity leaves etc to consider. Our salaries are likely to increase but I don't expect any massive jumps in income over the next few years.

Would you take on another mortgage to finance a house? We don't really have any significant debts beyond our current mortgage, so it feels like a big step to be committing to an extra (likely) £600-850 per month, which is affordable, but is a significant amount of money for a significant amount of time.

Your mortgage would still be relatively low compared to your salaries and what you could potentially borrow, so that wouldn’t concern me too much if you’re both in stable jobs.

Would it be more cost-effective to move rather than do the extension, though?

It is worth considering if the 150K extension will add that to the value of your home. (it may increase it more!)

I would have when interest rates were low, but the current rates are higher, and second mortgages often have even poorer deals. The interest would be huge.

Could you do a conservatory style extension cheaper? Or a lean to? Or think about how to make your garden work for summer entertainment? Eg shed with a bar, outdoor cooking area, really nice outdoor furniture?

I wouldnt fancy still being committed to pay a mortgage in 25 years and now a much larger one so it would be a no for me as I’d be focussing on how to shorten mortgage commitments not increasing them to ‘host’ others

Not unreasonable - but… and it’s a big but, are you sure the extension and all fittings etc will actually cost £150k?

Also what’s the value of your house currently and would you recoup the spend in terms of house value increasing ? There might be a ceiling locally which makes it better to move rather than extend

Tbh moving was plan A, but we are in a great location for our kids schools, our work, family support etc. We genuinely really love our house, it just feels like we've outgrown it as kids have come along.

I would still be open to moving, but we have been looking and haven't seen anything suitable.

Most of the time nowadays unless it’ll be your absolute forever home and the value is personal to you, you never really get a ROI for an extension like you did in say the 90’s or 00’s. I’d probably save and move/upsize i
a few years instead.

We’ve been quoted £150k for a 20m2 single storey kitchen extension, so that sounds perfectly believable to me.

Edit: oh did you mean it might cost more? Fair enough if so.

Also are you sure they’d lend another mortgage with husbands age? Just as he’s less than 25 years off retirement age

His State pension age will be at least 68, so that’s more than 25 years away. A lot of lenders will lend into retirement now anyway, so I think that should be fine.

You're out of touch - many lenders will give people 10 years older a 25-30 year mortgage term. The OP's husband has 28 years at least before retirement age

The husband is only 40 so he has more than 25 years to state retirement age. Also, many mortgage companies will lend up until 75 now.

Apologies I read 48 😂 no reading glasses as I’ve misplaced.

Yes it might cost more.

Of everyone I know who has done extensions in the aft few years… they have spent vastly more than expected!

I personally would do it. Have you considered the moving costs including stamp duty? If you are happy with the house and the area is perfect, and the fix is an extension then do it. At least you'll get exactly what you want that way. Building work is stressful but probably less stressful than trying to move.

We are in similar circumstances. Instead of an extension, can you rework the downstairs layout to give you more entertaining space? This is our plan as I just don't think our house will make back the £150k it is going to cost before we will potentially want to move. We are going to move some walls and put in a steel to open up the back so that we have more room, but not do the full on extension I originally planned.

We did similar at about your ages and income. The mortgage payments are now consolidated into one product, and we've increased the term to 27 years to slightly lower monthly payments.

How large is the proposed extension? Have you priced it up fully? We got 80m2 for £130k (plus new windows to old part of house) but that was over four years ago and extension prices have sky rocketed since. It really might be financially better to save like mad now and then move. I'd sit down and work out those costs of extending V's moving first.

I suppose it's hosting others but also accommodating how our family is changing. Kids want more space and to be able to have their friends over without being on top of us. I would like space for shoes, school bags, gym kits etc. Our house is old (but not listed) so some rooms are quite small.

I do take your point and we already overpay on our current mortgage as that's what we were focusing on.

No, I'm not 100% sure of costs yet. We are getting an architect around in the next few weeks to try to get a better idea, but £150k seemed a reasonable guesstimate after doing some internet research. I appreciate that this isn't the most accurate figure but I wanted something to work with when trying to look at finances.

I would!

I think they would. We have good credit and a lot of equity in our house. But I'm not 100% certain.

House is worth about 700k. I would need to ask the recouping question to an architect or estate agent. It's a valid point, although I don't think we'd move from here if we did do the work, at least not for decades.

Yes I think that’s it it’s either extend and sink the money in but forever home or don’t and move. You definitely wouldn’t get it back in value short term

This is my DH's logic. We moved about 10 years ago and he still remembers the stress and the costs associated with moving and is keen to avoid.