To sell or extend - please help me understand dh's point.

[lecce]

I'll start by saying that I'm not stupid but I find it very hard to understand 'logical' things and issues where maths is concerned. I really need to understand because a lot of money is at stake and dh is getting annoyed with me!

We have about £30k equity in our 2 bed house. We have 2 ds and no plans for any more but the house is getting pretty cramped. Both bedrooms are a good size, as are the 2 reception rooms. BUT, the hall is too narrow to store anything other than coats and the kitchen is tiny and very poorly- fitted at the moment. The garden is a decent size for 2 toddlers and 2 not-very-knowledgeable- gardeners. We love the house, it is a gorgeous Victorian semi with loads of original features and will be very hard to beat.

We like the area - close to town, near loads of great parks, a bit 'arty'; but schools, especially secondary, not great, and quite a bit of petty crime. Basically, once my ds are old enough to be out on their own, I won't want them to be round here.

We had house on the market earlier in the year and nearly sold but ftb pulled out after survey revealed that, shock-horror, house was over 100 years old and would, at some point, require some money be spent on it.

There was very little interest after that and we began to think that selling to be in the right area for secondaries was a bit silly since we don't need one for 8 years, political uncertainty etc. We have nearly decided to refit the kitchen and do a loft extension but I am scared.

Our agent, before we took the house off the market, warned us that prices could still fall dramatically. The loan (remortagae) we would need to do this work would take our monthly repayments up to nearly what they would have been had our purchase of a 4-bed a few months ago gone through. This frightens me as it seems we would be getting less for our money.

What I can't get my head around is whether or not we stand to lose money if prices crash. I feel we need to know that we would not lose the money we'd spend on the loft, not looking to make a profit but don't want to lose it. Dh says that it doesn't matter, that if prices crash we will lose money but that as long as a 3-bed in our area is still worth more than a 2-bed then we won't lose more than we will do even if we don't extend.(in the event of a crash)

I just can't get my head round this and it's driving me mad. We plan to move anyway in 4 years or so - is it really worth doing the work for such a short time? I hate the though of living in this size house for another 4 years though...

I'm sorry it's so long, I did try to be brief. I just hope someone can get through it and give me some advice as my head hurts with it all.

It's very hard to know if you will lose money without knowing the value of the houses in your area and how much you will spend having the work done. Generally you will lose less money by extending the house - eg, making a two-bed into a three-bed - than you will buying a house that already has three beds. But, if you are thinking of moving anyway in four years' time and you don't seem very sold on the area, I would try to sell again and buy something you prefer (but you might lose more money that way...).

If you were looking at it financially, you would have to calculate how much money the extension would cost you and how much it would add to the value of the house. Then you would simply calculate how much house prices will fall (or rise) by to know if you are in profit or not by the time you come to sell.

But remember, it's not an investment, it's your home. If you go ahead with the extension, you will have more space in a house you love. Don't worry about schools until nearer the time. Your local school may improve, and if it doesn't you will have a more desirable house to sell.

tbh, I'd just move. Why invest loads of time, energy and money in a house that you don't want to be in?

couple of things to ponder- if you "only" have 30k in equity- how much are you going to borrow and is it agains the house? to get decent mortgage deals, you dont want to go above 75%.

is a loft extension going to solve the problem? if you have 2 decent size bedrooms and reception rooms, a smallish loft conversion might not solve very much. presumably your 2 little ones could share until you move (4 years or so?)Mine loved sharing until they were about 7/8.

you might add some value to the house by doing a loft extension but this will depend on lots of things- how well it is done, whether there are other 3 bed houses locally with a more conventional lay out and how much they are.
tbh I would have thought that you would be better having another push at a move now. I feel that the more you have invested in a property, the more you have to lose in the event of prices going down. If you are worried about prices decreasing why chuck more money at it?

If you think that you are going to be there another couple of years, you would be better off buying a nice big shed for the garden for the kids toys, maybe putting a nice but cheap kitchen in and getting some decent storage.

Biggest gain you can have on a property is doing the loft (Phil Spencer has it as his no.1 improvement). Its quite simple to do and not that disruptive, but kitchens are but also good value to refurb. The value of your house may will increase as you are going from a 2 bed to a 3 bed (which most families want at least) - but the price may fall if prices fall alot. However, if you are trading up i.e. buying a more expensive home, it means what you will buy would have fallen even more. So you upsize in a falling market and downsize in a rising market - in general.

I agree £30k equity does seem very small to consider upsizing with current good mortgages being given to those with high deposits. If you use all of that to do the conversion and prices fall you may not be able to get a bigger mortgage.

How secure are your jobs - do you want to add to your repayments if there is a chance one or both of you lose your job?

If you are moving anyway then maybe tart up the kicthen/bathroom in order to try the market again next spring?

I think if I were you then I would move. I had a lovely house in a dodgy area. We sold and moved to nicer area and now feel much happier with schools and allowing DC to go out alone when older.

Is your house a FTB house, if so then they may not want to pay the extra for a third bedroom if you do extend into the loft - wouldl you lose the FTB market?

I think in your position I would ask an estate agent or two around to discuss the options and listen to their advise - they know the local market after all!

If you are going to move in 4 years time, I don't think I'd be rushing to do a loft conversion.

It is amazing what a difference having a proper thorough declutter can make. Refurb your kitchen if it's desperate to be done/you can make better use of the space etc.

Is you loft easily accessible for storage? That can make a huge difference too. We had it boarded out and lights up there, fitted a loft ladder and stored lots of stuff up there.

We were ruthless with what toys and equipment were kept out, anything that didn't get played with much went up in the loft for either rotation, keep until older or to sell. Have you got a decent playhouse in the garden? Again somewhere to put some toys in there too.

You have high ceilings make sure that your storage capitilises this, drawer units that are high, we've got lots of ceiling height toy storage from Ikea etc - put some of it out the way and rotate reularly. We had 2 of the girls sharing a wardrobe by putting in 2 rails - one at the very top, one half way down.

We had 4 dc in a small open plan 3 bed terrace. I would try saving the money you would spend on an extension to enable you to move with a smaller mortgage/higher equity percent when you do move.

First thing, if I was looking for a 3-bed house, I wouldn't consider the 2-bed house with a loft as equal to a normal 3-bed house. I think it creates extra space, but not convenient to be over three floors.
In my opinion, you should do the necessary things to improve the sale value and live where you are until you are mentally and financially ready to move. But I would move eventually. And I wouldn't invest into major extensions, either.

I agree with Toja about the loft bedroom. We are looking to move at the moment and want four bedrooms, but I immediately discount any houses where one of the bedrooms is in the loft - and I particularly dislike those with the master bedroom in the loft. A spare room in the loft which can be used as a playroom is a bonus.

My suggestion would be to move sooner rather than later as houses in good areas (particularly in good school catchment areas) go up faster than those elsewhere, so the gap increases. And time has this nasty habit of creeping up on you. Better to be moving your kids when they are young than when they have settled into a school.

No-one knows what house prices are going to do in the short term - it may depend on where in the country you live - but they will always go up in the long term. The question is, I think, whether you can afford the extra mortgage you need to move.

If you are not totally happy in the house/area I would put all your resources into moving rather than improving. We were recently in the same situation and agonised over whether/when to move. We finally decided to move just before DS starts primary school (even though it's 7 years till we'll have to worry about secondary schools!).

We moved last month and I'm so glad we did! The new area is SO much nicer, the neighbours are friendly, the schools are great. We were lucky the right house came up, as we were considering going into rented otherwise.

Annoyingly, we'd just spent £7k on new bathrooms in the old house. It probably helped the house to sell quickly, but I don't think we got back what we had spent, and I'm not sure it was worth all the stress and hassle involved.

Prior to putting our house on the market we fixed our leaky roof / damp patches and I think that was definitely worth doing, as it helped us to sell to FTBs. Rather than doing any major improvements such as the loft, could you perhaps focus on fixing the stuff that came up on the survey? Was there was anything specific that scared off your previous buyers?

Thanks for all the advice. I think you have convinced me what I already knew really- that we need to move. I know myself that a loft bedroom does not make for more space overall. Arty, when we were hunting a few months ago we always ruled out those where one of the main bedrooms was in the loft.

The kitchen is so weak, improving it will surely make it easier to sell though I know we probably won't get the money back.

Cath, there was nothing particular, the surveyor, as they do, pointed out loads of little things that scared them. For instance, he helpfully pointed out that wooden window frames rot if you don't maintain them. They have been recently varnished, as he admeitted, he was just stating a fact. It was full of useless shit helpful advice like this and they, being stupid naive panicked and fled.

Ok I'm ranting now. Thanks again for advice.

Back to the clutter clearing,making most of storage etc etc Invest in good storage to make your daily life more pleasant until you find somewhere to move to etc.