Your home is the most expensive asset you will own. That fact is a given. However, for many reasons, the home you bought might not offer you all the opportunities or space you want in life or need to accommodate changes in your life, such as starting a family.
While having a mortgage is considered a good debt by many, maintaining your payments comfortably is a priority. As such, this can rule out being able to move to bigger properties for many people. If you do move, taking out a more expensive mortgage can negatively impact your finances and quality of life-risking your credit.
Of course, this is a risk many people see fit to make and take the leap to increase debt levels and take on a bigger mortgage. But, if you can’t afford to take a bigger mortgage, have you considered renovating your current home? And what are the benefits to making the home you currently live in fit you rather than finding a new home that ticks all of the boxes?
New Homes Might Still Need Work
This is most definitely a case of better the devil, you know. Even moving into a new property could still mean you need to adapt it to ensure it has all the space and amenities you need it to have for your circumstances.
Depending on the survey you have before moving in, you could end up having to undertake repairs or remodelling to maximise the space you will be moving into fully. However, one benefit of having this work carried out in s new house could mean you don’t have to live through the mess and upheaval while the work is being done.
In this case, choosing to stay in your current home and having the work done to accommodate you could be a more cost-effective choice.
Moving Costs Can Add Up
Remember how much you paid to buy your first home aside from the deposit? In this instance, you will need to find them to pay for the fees to move home again and sell your home.
The costs for buying a new home include (all prices are examples and could change from agent to agent);
- Property deposit anywhere from 5-10% if not more. This could be over £30,000 on homes valued at £300,000 and upwards.
- Property Survey – £400
- Conveyancing – £1,000
- Estate Agents – £3,500
- Removal costs – £1,000
Don’t forget to add stamp duty if you buy the property over the threshold (currently £250,000 in England).
Once you add all of this up, it can be more cost-effective to put this money into your current home to avoid paying out for further work and fees during the moving process. It could be worthwhile to speak to a mortgage broker to assess your options and make the best financial decision for you.
Benefits Of Buying A New Home
Depending on the home you choose, the cost of moving can be a small price to pay not to have to undertake the work required. Some people are resigned to this fact because they will be spending the money regardless, and having to do as little remodelling work as possible can make a new home move more attractive. Especially if you have a young family and demanding jobs. Sometimes there isn’t the time or the inclination to do so, and there is nothing wrong with this. However, paying close attention to your budget to save and prepare for your upcoming move will start you on the right foot.
Benefits of Extending Your Current Home
Nearly 50% of UK homeowners have said that they would rather extend their home than have to buy a bigger home, and 35% of those people would remortgage to do so. So while you will still need to invest in your property, why exactly is extending your home better than moving.
There is no major packing, no exchanging contracts and no upheaval from where you currently live if you like the area. Moving home is one of the most stressful life events as an adult, and renovating and extending your current home can help you avoid this stress. However, building works come with their own love of stress and upheaval; however, no whole house packing and moving are required.
If the whole reason for considering moving home is the lack of space, designing your own living space can be an attractive proposition. Plus, there is no ongoing chain to worry about, no stress of having to sell your current home to purchase a new one and no late-night worries that something will go wrong and you will lose the house you want or have to pay more for it in a bidding war.
A new extension can be cheaper than buying a whole new house. Let’s look at building a kitchen extension on a one storey level. Typically depending on the materials and finish you choose and the work involved, a kitchen extension can cost you around £35,000.
However, this can add up to 23% to the value of your home, depending on how you configure the space and what rooms you add. This will increase as you choose more high-quality fixtures and finishes. In many cases, one level kitchen extensions don’t need to run through lengthy and costly planning processes, but if you decide to add a full-height extension, you will need to look at planning permission.
A full open plan kitchen diner along with an extra bedroom or bathroom/ensuite created by adding an extension can maximise the return of your investment and make your house more attractive should you decide to sell in the future, as can loft conversions which add extra rooms, for example, master bedroom with ensuite. Loft conversion, where you use the space you have and add a roof window, doesn’t usually need planning permission, but if you need to make further adjustments to add ceiling height, you need to have planning permission before work starts and increase the cost of this type of work.
While both options have their benefits and drawbacks, choosing to extend your home or buy a bigger property can be a personal decision. Before you make any firm decisions, you should make sure you know the financial implications of borrowing more money before you over-commit to increasing your debt level.