Move or extend? (London)

[Tetherless]

Feel like I might be missing something here, advice welcome.

We don’t have enough space in our current home atm. When our fixed term is up LTV should be about 50%. The cost of an extension to get the space we need at current costs (which have rocketed) is probably about half our equity, so we’d need to remortgage to pay for that and our LTV would go down to 80% (of existing house value). I think the extension would increase the value but we wouldn’t make any money on it and we might just about break even, plus factoring in all the disruption and sunk costs on things like renting somewhere for part of the time. We wouldn’t be able to remortgage to factor in the increase in house value probably for a couple of years.

Alternatively, if we sell, we release that 50% equity which means we have a sizeable deposit. My salary has increased so we could borrow a lot and could afford a house with a much bigger footprint. Monthly payments would increase but not significantly more. Sunk costs would obviously be stamp duty and moving costs.

I can’t decide what makes more sense. I can give the amounts involved if helpful. Kids are 4 and 2 so high childcare costs atm which will reduce soon.

Where do you want to live and in what house?

Long term another financial factor is that if you add rooms to your existing house your Council Tax band stays the same. If you move you will presumably be moving into a house with a band that is higher.

I would move given everything you've said. A double fronted house in a conservation area would be my preference long term.

If you can afford the bigger house then I would go for that. I am also in London but in a much more expensive area and had this dilemma recently. In my case I decided to extend because I couldn’t find anything much bigger that I could afford, as the price differential between my house and a bigger house was quite huge.

I would advise move too. Moving for secondary is difficult as when is the right time to move? In year 5, year 6? It will disrupt the last year's in primary - which is more difficult.
Unless you will try the independent schools for secondary.
Move now to a bigger footprint and you / your kids will enjoy it longer. Their childhood memories will be of the next house.
It doesn't sound like this is your forever home - so sooner you move the better.

I think I'd move, if it's within the area. Having a bigger footprint in the original building means less compromise. Plus £250k may or may not cover your extension plans. I've spent £100k with NO structural work but have renovated throughout (and no rewiring and just minimal plumbing). New kitchen and bathrooms and built in wardrobes, moving laundry upstairs etc.
Unless you think the building works would increase the time in your house to 10+ years I'd move. All the houses on my terrace have extended out back and majority the loft - it's a comfortable house for family of four, but there are a few streets of terraced double fronted houses and they are definitely more desirable, and they will always carry more value.

I would also move if it meant a traditional layout - I’d rather not have three flights of stairs to vacuum and have kids on a different floor.

I don’t think you’ll add the value of the building cost won’t increase the price of property.

It worth putting some time and effort into this, get some quotes, ask an estate agent to value on the works being done, look at other properties.

Thanks all. It’s definitely good for thought. Slightly tricky in that our fixed term mortgage ends next June so if we’re going to be doing the works then need to be lining up builders and architects etc now. I suspect prices of the bigger houses will go up faster than ours will so we may miss the boat.

Definitely need to give it some thought.

You can move the mortgage with you

Living in a conservation area doesn't prohibit doing work to the house (internally at least) in your situation I'd definitely move.

@Tetherless

For c1.2m we could get a double fronted Victorian house (there are a load in a nearby conservation area), which would give us the extra space we need, but they tend to be in awful condition so would need work, albeit not structural (as footprint is there but also prohibited as conservation area).

I live in a conservation area and you can often still extend. You aren't allowed to do anything to the front without permission though. It took us 4 months to get PP for new sash windows even though they were an exact copy of what was already there.

Interested to know where you can get a double fronted Victorian detached house for 1.2m though.