Advice from parents is always a long the lines of "we wish we stretched ourselves more when we were in your position", but these feel like different times.
Quote from: Liamhutch89 on September 26, 2022, 09:46:50 amAdvice from parents is always a long the lines of "we wish we stretched ourselves more when we were in your position", but these feel like different times. I have no useful advice (sorry!) and no doubt the answer depends a lot on salary levels, ability to find another job if you lose your current one, life priorities etc, but I'm intrigued by this comment... why do they wish they'd stretched themselves? I always take advice from older relatives with a pinch of salt unless you share quite similar views on priorities/world views/what makes you happy etc.
How much is the house worth now? (or how much value will your £150k extension add to it?)Have you already got planning / is it permitted development?Have you already got your builder lined up and quoted?How much contingency have you allowed for in the quote?
Really appreciating the views presented, in particular, not sleeping on the quality of life gain from the house itself! It's easy to forget about that when crunching numbers.Kac - I've gone round in circles on this and it's tricky because my current mortgage has 2 years left at 1.1% and to fund the extension we have an extra borrowing offer of £140k at 3% for 2 years. At that point we could combine them if wanted. We only really had one offer to borrow as much as we need, so it was take it or leave it. In terms of financial stress from rising interest rates, again this is very much a problem I hesitate to share right now, but I think it would mostly impact our disposable income and not our ability to pay the bills, unless things really start to look bad in the economy (say 10%+ interest rates but then I'd imagine most of us are fucked anyway).
If you're confident in your estimates / valuations, then I think you'd be hard pressed to find an investment that will return 33-66% in the time period of the build, so purely from that perspective it'd be worth it. Better than the 5% interest rate you'd pay to fund it. Theoretically you could sell and have made a gain (though I imagine the thought of a house move with 3 kids is not fun).
Quote from: tk421a on September 26, 2022, 01:29:24 pmIf you're confident in your estimates / valuations, then I think you'd be hard pressed to find an investment that will return 33-66% in the time period of the build, so purely from that perspective it'd be worth it. Better than the 5% interest rate you'd pay to fund it. Theoretically you could sell and have made a gain (though I imagine the thought of a house move with 3 kids is not fun).Worth bearing in mind that this relies on the housing market staying pretty strong. If house prices take a dive then the return could be substantially less. Less of an issue if you're planning on staying in the property for a substantial period of time though as you can wait out dips in the market.
Slight disagreement to the nominal value of your home not having any importance if you're not intending on selling - if you were to take a long enough view, you might want to consider it in the context of inheritance to kids.
Point being, in a rising market, moving to a bigger house ALWAYS costs more. It might "feel" nice to feel like you have £50k, £100k etc. of "value" in your house added on when the market shifts, but it doesn't really ever benefit you, the carrot gets bigger but the stick also grows longer.... I just never quite understand the UKs national obsession with thinking house price inflation is a "good thing". Most of us would be much "better off" in a flat or dropping market.
Good numbers there!Quote from: Fultonius on September 26, 2022, 07:30:58 pmPoint being, in a rising market, moving to a bigger house ALWAYS costs more. It might "feel" nice to feel like you have £50k, £100k etc. of "value" in your house added on when the market shifts, but it doesn't really ever benefit you, the carrot gets bigger but the stick also grows longer.... I just never quite understand the UKs national obsession with thinking house price inflation is a "good thing". Most of us would be much "better off" in a flat or dropping market.If house prices are rising faster than inflation and your end game is "sell this massive house in london I bought 30 years, move anywhere else in the country, retire" then inflated house prices are a good thing because you end up with a big wedge of cash. Agree that if you want to stay in the same area or, god forbid, move up the property ladder then it doesn't help at all.
And by the way Liam....what is you do that you can afford a big hoose, 3 kids AND get loads of time (and energy) to climb pretty well while already having paid off so much mortgage? Good effort!