Pay Lump Sum Off Mortgage V's Extension

cjohnson355

Hi All,


One of our endowments is due to mature next month and it should pay out around 32K. We have a couple more that will mature within the next two years.


I'm thinking that perhaps we should consider putting the money towards building an extra bedroom with dressing room and en suite above an existing double garage or perhaps a loft extension instead of paying it into the mortgage. All the endowments we have will never pay off this mortgage when they mature but we hope to have a tidy sum when we retire in aprox 7 years to buy somewhere outright when we sell the property, albeit that property prices stay the same or increase. At present we have split our mortgage to part repayment and part interest only. I would say the interest only part covers about a quarter of the mortgage.


I just can't get my head around which would "hopefully" be the better investment towards our future. I read somewhere that if you are considering moving within ten years of building an extension you may only just break even. Should that be the case then there's no point.


My head is saying to pay it into the mortgage as that's what we took out the endowments for and if we keep the mortgage repayments the same then we could potentially make the same kind of profit without even building an extension.


I'm really confused and would be very grateful for any advice.

Thrugelmir

If you intend moving. Is spending money on the property really worthwhile?

Do you have adequate pension provision?

dimbo61

This is a question only you and your other half can decide.
Will adding an extra " Master bedroom and en-suite" add more value than the cost of building it?
Do you own the only 3 bed house with large attached double garage ( easy extension) on the road of mostly 4/5 bed detached houses?
Will your property become the most expensive house on the street when you come to sell?
Do you need the extra room.
How good is access for builders to build the extension.
Can you "Do it yourself" or have skills to help
Are you happy living on a building site for 3/4/5/6 months
Who will use this bedroom ?

cjohnson355

Thrugelmir wrote: »

If you intend moving. Is spending money on the property really worthwhile?

Do you have adequate pension provision?

We hope with no mortgage our pensions will be more than adequate. We intend moving in 7 years so that's really our dilemma. Is it worth building an extension and would it make us any profit by doing this now.

cjohnson355

dimbo61 wrote: »

This is a question only you and your other half can decide.
Will adding an extra " Master bedroom and en-suite" add more value than the cost of building it?
Do you own the only 3 bed house with large attached double garage ( easy extension) on the road of mostly 4/5 bed detached houses?
Will your property become the most expensive house on the street when you come to sell?
Do you need the extra room.
How good is access for builders to build the extension.
Can you "Do it yourself" or have skills to help
Are you happy living on a building site for 3/4/5/6 months
Who will use this bedroom ?

We would be looking at the builders just building the shell and make water tight. We have an electrician in the family and we are capable of plastering and plumbing. May take a while but we have 7 years lol. Other people have done the same but I haven't a clue how much their properties are worth. I suppose to weigh up the pros and cons maybe getting in touch with our local estate agent may help? We certainly don't need the room for just the two of us in this 4 bed house. By building an extension would purely be we think a means to increase our pension pot.

getmore4less

Separate the issues.

Start with the extension/improvements and work out if any are good investment, adding value, ceiling prices, personal benefit etc.

Then look at the funding issues and the cost of the debt to fund any project.

dimbo61

You could consider having 1 or 2 lodgers if you have a big house and spare bedrooms.
Not sure if you and the wife would be happy with that and depends on where you live ( university city) or rural countryside?

Thrugelmir

cjohnson355 wrote: »

We hope with no mortgage our pensions will be more than adequate. We intend moving in 7 years so that's really our dilemma. Is it worth building an extension and would it make us any profit by doing this now.

Unless you are building yourselves. Then the winners are more likely to be your lender (interest), the tradesman (profit) and the treasury (VAT). In the boom years. People made as much money simply holding property as expending money refurbishing it.