move or improve??

lisred

In a real quandary!

Have a 2 bed semi. Need a 4 bed house (had 2 babies in last 13 months!) ideally. 3 beds would do i suppose.

Have a mortgage of £80,000 house currently valued at £125,000 ish. £10,000 savings.
Average 3-4 bed house price around here is £160-220,000.
Mortgage of 175 would be top of our budget. Currently have 2 year fixed rate 5.99% till oct 09.

Currently we have a large garden front, back and side. Side garden as wide as width of current house, so should we just extend. Not a bad area and eldest son settled at school.

Do we go to our existing lender to remortgage for more of the value of our house, to extend and ultimately value of house goes up? Or better to just move to what we need and get bigger mortgage? Talk of house prices falling makes me cautious to do this aas don't really want to be in negative equity. Surely extending is the only option. But how will it work with a mortgage can we borrow against the house or will we have to take out a homeowners loan?

Not confident when talking about money. Need someone to tell me what to do for the best!:o

Cheers
L x

lisred

anybody?

takoo

As to worthwhileness you might consider:

• Points to consider:
  • A valuer might use the residual valuation method to get at "worthwhileness":
  • value of house as extended - value of house as now = the increase in value
  • compare the increase in value with the total cost of works etc.
  • if the answer is +ve it may be worth doing
  • but the market may fall over the next 9 months or so
  • but if you are staying - you will not need to buy a bigger house with legal costs + stamp duty + removel costs etc (ie What is your opportunity cost?).
  Much depends on the hassle factor in DIY project management = what you could earn doing a job + some "profit" = Risk and profit in the market valuation.
  
  
  
  

Good luck
Takoo

EdInvestor

Suggest you ask the question on the Mortgages board for a view from the brokers there, given the problems in the mortgage market at present.

It's *really* difficult to buy and sell at present, (not to mention expensive) so you will probably be best to extend.

nixinix

If I had the option I would extend....i need to move, as very similar circs to you but I don't have room to extend and am not in good school area...why don't you get a builder round and talk money etc...are you likely to have any probs with planning? If I was you I would explore the extending option further before maing a decision. Good Luck.