rent? move? extend? please help!

[chosenone]

Looking for any advice or tips to add to ones given by family or friends!! we're confused! here goes... we stuck in a little 2 bed semi with 2 under 5's as we are not far off negative equity. We owe 115k on house prob wouldn't sell for much more than that as neighbours hasn't sold for 120k and we couldn't sell last year for the 135k it was valued at then. So our options;

A put up with it, make the most out of it, overpay on the (at the moment) mega cheap mortgage and see if we have an equity in 2/3 years or if we can get mortgage with 5% deposits again by then!?

B Rent ours out and we go and rent somewhere bigger and maybe nicer, but worried about risks if ours empty or rates go up

C get a home improvement loan and do everything, cellar and loft and commit to paying and staying here for at least 5 years until loan paid off

Which is the best option in your opinion? we only ever wanted to live here for around 5 years and have toddlers here as knew we'd outgrow it and kids would have to share. The area is ok and quiet, son in lovely school its just we have spare cash and always thought we'd have moved by now?? any ideas/tips gratefully received

If you are happy in the area and the school is good then I would say definitely try to improve it. Have you got a height of 2.4 m at the apex of the loft - you can extend into it if you do. Is the garden big enough to take an extension? Have any neighbours done big extensions and set a precedent?

Of course, a loan to extend may well depend on having some equity in the house so you could be stymied there.

How much of a hit can you afford to take on the house? If you ended up with £110k, for example, would that still enable you to move into something bigger? Do you have savings that you could use as a deposit?

I wouldn't rent it out unless you are really desperate to move, that is the only way you can achieve it and you know that there is a shortage of similar rentals in the area.

A) sounds 'sensible' but not very practical. You'll probably all be going mad at each other by the time your mortgage over-payments are paying dividends...if at all.

b)Renting is only a good option if you'll get enough rent on your property to make it worth your while. You'll need enough cash in your pocket to cover empty periods too. The house you rent will NOT be yours and you'll have to adapt to that. On one hand you'll get the space but you'll find that the limitations it puts on you could be very difficult. Plus (and it's a biggie) you can be moved on at any time with very little notice. This could affect your son's schooling. Also, if the housing market doesn't 'recover' (no reason to think it will soon) then you'll 'trap' yourselves, as you won't want to go back to your home and you won't be able to sell it.

c) Big believer in C. Make do and mend! Well, extend. Don't go mad and try and do everything. Go to planning office and get all the info on what you can do without planning permission (you'll be surpised) as the rules changed Oct 08. See how much space you can add, as cheaply as possible. Plus, when the market moves, you'll be so much more attractive to buyers.

You like the area, you like the schools and apart from the size, the house is ok too. Seems to me, in this economic environment, that C) is the best option

I think I would probably go with A. you're in a great position if you can pay off a lot of your mortgage. house prices WILL rise again eventually and then you'll be in a really good position for buying a bigger house.

if the area is good and your son is in a lovely school then why move if you can make do for a while longer? sharing a bedroom is no big deal really, and you could look at doing (C) somewhen in the future if you feel you really need the extra space.

a) is least risky, but probably most hardwork. it depends on what you are willing to put up with.

would c) make it a forever place, or would you still be lookng to move?

BTW - are you chosen one or chose none or is it deliberately ambiguous?

We're doing A, overpay the mortgage and save some too so not all eggs are in one basket, by the time I'm desperate to move in 2 years time I am aiming to have 25% of the mortgage paid off and a 20% deposit on the next place, not looking likely at the moment but I figured the stock market or the property will have recovered by then, fingers crossed.

Thanks for all the advice a lot of people are saying C as A might never happen and then we've wasted 2 years not doing anything!
I think we'd be happy here for 5 more years if we did the work possibly 10 so we're going to look into it.

and it's chosen one taken from the Mighty Boosh