Renovated or move?

[user148984678942]

Hello

I am trying to work out whats the smart decision here and looking for some guidance. We bought our first house few years ago. The plan always has been to build some equity and move on. The interest rates went up and we had to stay put.

Our mortgage is up for renewal soon and trying to figure out whether to move or stay and do some work on the house.

The house needs some work like new kitchen and plastering as there is plenty of blown plaster due to previous issues with damp.

The electrics is not newest, I dont know how old though the consumer unit is fairly new-ish. I guess it would be silly not to do rewiring before plastering.

Some of the problems that cant be solved which bother me is lack of driveway and no option for open plan kitchen/living room.

The house is worth about £460k and looking at the market for about £525k we could get a house with driveway, open plan kitchen and requiring less intrusive refurb.

My view is that the amount of £ spent on refurb would be close to difference in mortgage for a more expensive house so no brainer to move. However my partner is concerned with getting a bigger mortgage in case one of us loses their job etc.

We are now mid 40s so I am also wondering if at this age it would be a smart thing to increase financial commitment. Our current mortgage is about 22% of net income and new mortgage would take it to about 30%

Hi OP
If you want to do the work you reference I think it is going to cost more than the difference. If you are doing this to then sell, if you did the work, how much would your house be worth do you think? My instinct is if you invested time and energy into the work you would need to stay put for 7 years + or so to gain any proper equity.

Interest rates will likley increase in short term and this will depress values. I would focus on paying down the mortgage debt faster - not increasing it. Repair blown plaster. Dont do any further work than that.

I dont really believe this kind of work would increase value by much if at all. I just dont think it is financially worth doing it but at the same time, increasing mortgage, moving costs etc are also considerable costs and we are not getting any younger.

Are you sure the house is worth what you say. Are you basing that on a valuation for a house with significant blown plaster and signs of damp. If you think the house needs rewiring, then that will come out in a survey and also impact the value of the house. I'm not saying this to be mean, just that you need to factor in the repairs to the value you'll sell for, not to mention stamp duty, fees and moving costs. So make sure you are really comparing the true cost of moving house.

My figure is based on a combination of bank valuation from last remortgage and similar houses sold recently. Of course I cant be sure of the value until I put it on the market.

In terms of rewiring, I dont think it would bring the valuation down. The consumer unit is new-ish. I can however see the wiring was added/amended at various stages over the years and I think from practical standpoint it would make sense to rewire before plastering but I dont believe it is mandatory at this stage.

The trouble with blown plaster is it's very visible and a big red flag - you might know it's damp that's been fixed but buyers won't and it's the kind of thing that will massively impact your asking price, desirability and the offers you'd get. Realistically selling with that, your property is going to be viewed as a renovation project by buyers and it will probably drag your price down more than it would cost you to do the repair. Electrics are probably neither here nor there and depending on what the kitchen issue is it also may well not be an issue with selling - i.e. just a bit dated, but perfectly decent and usable.

One of the problems at the moment is that because prices for building works have gone up so much, people are a lot less willing to take on properties that need work.

To be honest your mortgage commitment doesn't sound particularly excessive and there's an argument that your age is a good time to move and increase mortgage - you can still take on another 20+ year mortgage before retirement, whereas as you get older your potential mortgage term will get shorter. But just make sure you base any decisions on realistic figures, and get the best price you can for the current property.