Should we go into more debt to enlarge our flat??

[temporaryname99]

We live in a 3 bed flat with 2 dds aged 10 and 7. It's a 3 bed, but we live in it as a 2 bed, because it doesn't have an eat in kitchen, so one room which would be a bedroom is a dining room/music room/office. The girls share a room.

We have the opportunity to buy a disused room next to our flat, which we could knock thru and make into another room. The council has quoted us £40,000 to buy it. Plus we will need to knock through, add heating, flooring, legal costs, so at least another 10 grand. Add another 10 grand for all the other stuff that needs doing in the flat, we would need to borrow 60,000.

The repayments would be £300 a month on top of our current mortgage, council tax etc.

Of course, nobody else can really say whether we can afford it, but I would appreciate any thoughts. Having an extra room would mean girls could have a room each, and we could use one of their bedrooms for guests when my parents come. At the moment, we have a blow up mattress in the dining room for guests, which is less than ideal.

But an extra £300 a month for the next 25 years seems like loads. DH is 45 and I am 42: we'll be 70 and 67 before we pay it off.

It's certainly cheaper than moving to a bigger place would be, unless we moved out of London, which I don't think we will.

Any experience or perspectives on this gratefully received!!

Watching with interest but no help I am afraid other than to say have you spoken to an estate agent about the potential increase of value?

How much value would it add to your flat? Depending where you are in London you could increase the value by a lot more than the 60k cost.

Yes, interesting question: as a rule of thumb, around here I would say an extra bedroom adds an extra 100k, but I don't think this rule applies to ex council flats. Yes, should ask an estate agent.

Bought flat for 225,000 5 years ago, owe 155,000 on it. Probably worth nearly 400,000 now.

but regardless of value, we still have to make repayments on extra money that we borrow!

Do you need to have a dining room/ office/ music room? Could you eat in the living room? Does anyone work from home in the office? Could you have a huge clear out to make more space available? How essential is the extra room?

Another £10K to knock through, add heating and flooring and legal costs seems a bit on the steep side. It cost us less than that to knock an entire wall through and add an RSJ - you'd surely only need to knock a doorway if you plan on using it as an extra room. You've also added another £10K for 'all the other stuff that needs doing'. Presumably you don't need do to all the other stuff. So you could get the extra room or £40,000 + £5,000 for doorway, heating etc. (and I think that's the high side), so that should bring the repayment costs down to £225 over 25 years (or £300, but reduce the repayment period).

Have you spoken to your mortgage company to find out if they'd allow you to take a mortgage to age 70?

Have you tried negotiating with the council? If the disused room is only next to your flat, their market to sell it is limited so you might be able to negotiate a better price.

I'd do it but I reckon there's some haggle room with the council. Treat it as an opening price and see if you can knock them down a bit. I do think your £10k costs sound high for what is a fairly straightforward job on the face of it (unless the room is enormous or you're going for a very high-end finish/adding an en-suite etc. My only reservation would be if it creates a room off a room which wouldn't be that great. Oh, and make sure the council include paperwork involved in incorporating the room into your flat in its price. Good luck.

Would the council actually give you planning permission for the structural alterations and how long are the leases on your flat and the potential extra room?

Personally I would do it if you do not plan on moving within the next 10 years or so. £60k is a small price to pay for an extra room and the chance to stay in the same place for the next 10 years or so.

Gosh, so sorry, I wandered off my own thread, assuming there would be no more replies! Thanks all for these useful comments

In terms of how essential it is, I don't feel it's 100% essential, which is why I'm shying away from doing it. However, could we eat in the sitting room? No. Have lived like that before and would prefer to sacrifice extra bedroom, as we have, to make room for another family space where we can play guitar, use computer etc rather than cramming everything into sitting room which is also further from kitchen
Thanks to those who suggested negotiating with council, yes, this is an option, as it's either us buying it or nobody.
Interesting that you think 10000 is a generous estimate for the work; that will be good news for us if it's a lot less. A builder came round last week,ad waiting for an estimate.
Also thanks to poster who calculatedr reduction in repayments, if we don't spend as much; very helpful. Am on my phone and don't know how to look back at posts as I write this!

Oh, it was snow girl! Thanks. Re mortgage company, we could take mortgage to 67, but they won't lend on it, because it doesn't belong to us yet- in technical terms it has a different title. We might have to borrow elsewhere, get it done, then re mortgage to pay back
Also meant to say, the 10000 I was budgeting for the works includes legal costs which are not included in the council's price for buying it. Somebody asked if they were
Yes, we have already gone through extremely long and painful process with council to get permission to buy and are now in long process of getting permission to alter. 18 months in, they have only just given us the figure of 40,000.

OP, re the financing, surely you just borrow against your current flat, either by increasing your current mortgage or an additional sum with the same provider? Certainly not a personal loan and then remortgage later, if I'm interpreting your post correctly.

With your current and potential LTV, they won't give two hoots why you want it. Some people remortgage to spend it on gin!

I would do it if I could negotiate a lower price probably. I would also look at how much it would add in value to your flat. Bear in mind that you night be looking at downsizing in 10 years and appreciate not having a huge mortgage! We are moving to a bigger flat atm as we are in a similar situation.

Lastnightiwent; no, apparently, they won't lend us against our flat in these circumstances. I've asked the mortgage company directly, and a mortgage broker has asked around several lenders for us.

Yes, allegretto, we need to think how long we will be here.

In your circumstances yes I would do it.

I had a thread recently about extending our not-forever-home and the general consensus was to do it but it actually helped me make up my mind not to do (yes l know, I'm annoying )

But questions like how long will you stay and how will we cope through the works running through my mind help decide.

Do you want to stay there for 10 years (that was my extreme and l couldn't even say for the next 5).

It's strange that the bank won't lend against it as it is with around £250k equity?

I know, but they would happily lend for other stuff within the flat, but not to purchase a room which is currently under a different lease.

Negotiate with the council and then see if there is a specialised lender that will give you a bridging loan for you to buy the room and get the paperwork sorted before you get a conventional mortgage. Get your solicitor either to have the costs included in the council's price or, failing that, get a fixed price for their legal expenses upfront.