Whether you’ve been in your property for weeks or years you may be feeling the need for more space.
It could be that you have a little one on the way or just need more storage room. Either way, you’re faced with the choice of either moving to a bigger house or extending your own.
Whichever you choose it is likely to be expensive. For example, according to a study compiled by Post Office Money and the Centre for Economics and Business Research (Cebr) at the end of 2014 the average cost of moving house, including stamp duty, estate agent and surveyors' fees and removals came to £11,894. To get an estimate of how much it would cost you to move, why not use the moving house calculator?
Deciding whether to buy a new house or extend can be a tricky decision to make but we’ve outlined the most important things to consider to help you reach the right one for you and your family:
1. How much extra space do you need?
Think about how much space you need - and will need in the future – and whether your current home could realistically give you that by extending. Do you have space on your plot for an extension? Has your house already been extended (in which case you may no longer have permitted development rights and would need planning permission)? Or do you have a garage, loft of cellar that you could convert?
2. How much do you like the area that you live in?
Are you currently in the perfect spot for commuting? Do you love your neighbours? If you really have found a lovely location as well as your dream house, then it may well be worth extending rather than moving. This is particularly true if you live in a very desirable area. You might want to invest in the value of your current house as well as get a bit more space.
3. How much money do you have / how will you fund this?
Obviously, money will factor into your decision. Moving to a bigger house is likely to mean a bigger mortgage that you’ll be paying off for many years to come. You’ll need to think carefully about whether you could afford that – not just now but over the long term.
As the number above shows just moving house is expensive, before you even factor the additional cost of buying a bigger house (and repaying a bigger mortgage). This is especially true with buying more expensive properties where the Stamp duty can be considerable and represents “dead money” that you could have spent extending your existing place.
If you decide to extend rather than move then you may still need to borrow to fund the work, if you haven’t got enough tucked away in savings. One option may be to extend your existing mortgage. But both a secured and unsecured loan may also be worth considering too. Spreading the repayments over a longer term will make the payments more affordable but you will end up repaying more. Remember if you do decide to borrow to fund the work you need to think carefully about whether you can afford the repayments – especially if the loan is secured against your property.
Whilst you need the extra space it is also worth considering whether the amount of money you spend on the work would add much value to your house. If the cost of actually doing the extension adds up to more than the value you’d add, it may not be worth doing it, unless you are planning on staying in your home long term. Once you know the cost of the work that you’d like done you can also compare that directly with the costs of moving and the extra you’d have to pay to get the space you need in a new place.
4. What are you allowed to do?
Check what the council planning department and your mortgage provider will allow you to do. If you are trying to release equity from your home to do an extension, it will be down to your lender whether or not you can go ahead.
If you are lucky your extension may not need planning permission, but if the works you want to do are substantial you may need to apply – which adds cost and can be a time consuming process.
5. Can you put up with the work being done in the house?
If you have young children or a generally very busy house, it might not be practical to get work done on your property. Also bear in mind that the work could go on for longer than your builder estimates which could push your costs up. You need to make sure you have a contingency plan in place in case this happens. If you have to move out during the works this will make the whole project even more costly.
Consider the implications
Making sure that your home is just right for you and your family and is affordable is so important so take some time to think through all the options. As long as you keep an open mind and do your research you should end up with the house you want and need, whether that’s the one you’re in now or a new one.
Whichever option you go for, you need to be confident that you’ll be able to afford your mortgage or loan repayments as there are serious implications if you can’t. You shouldn’t overstretch yourself as you could end up regretting it later on. Perhaps you would benefit from saving for a while before you take the plunge so you don’t need to borrow as much. Alternatively you might need to downscale you plans to cut your costs.
Once you have decided whether to extend or move you need to consider how you will finance your upgrade. If you have equity in the property you may be able to use some of it to fund an extension or perhaps you could opt for a homeowner loan. If now is the time to move on, you may want to complete any unfinished DIY jobs before you put your home on the market, to try and increase your chances of getting a price you’re happy with.
Whichever route you go down, we wish you the best of luck!
Disclaimer: All information and links are correct at the time of publishing.