Should you get a mortgage to pay for a rear extension or loft extension or just move home?

Deciding between a rear extension, a loft extension, or relocating to a new home depends on several factors, including financial, practical, emotional, and lifestyle considerations.

If you have high early repayment charges on your mortgage, it may be difficult to move home unless you port your mortgage, although it is usually possible to access additional borrowing.

Channel 4's Love It or List It program has inspired more people to consider improving their home or moving and assessing what is best for them. Here's how you can break down your decision:

1. Financial Considerations

• Cost of Extensions:

  • Rear Extension in London: Typically £80,000-£140,000+ depending on size, materials, location, and design complexity. For the rest of the UK it is between £75,000 and £120,000.

  • Loft Conversion: Usually £50,000-£130,000, but varies based on structure and layout.

• Cost of Moving:

  • Moving includes estate agent fees, stamp duty, legal fees, removals, surveys, and redecorating or furnishing the new property. Costs typically range from £15,000 to £50,000+.

• Mortgage & Equity:

  • Extensions can add significant value, potentially offsetting their cost.

  • Remortgaging or taking a bigger mortgage to fund extensions often offers better value than moving, especially if interest rates are favourable.

2. Practical Considerations

• Planning Permission & Regulations:

  • Check your local authority’s rules regarding permitted development vs planning permission.

  • Loft conversions often simpler (less planning permission hassle), rear extensions sometimes more complex.

• Feasibility & Property Structure:

  • Does your property’s existing structure suit a loft conversion (roof height, structural integrity)?

  • Does the land or plot comfortably accommodate a rear extension?

3. Space and Lifestyle

• Purpose of Additional Space:

  • Loft: Usually extra bedrooms, home office, guest rooms.

  • Rear extension: Often creates larger living spaces, kitchens, family areas, or dining rooms.

• Future Proofing:

  • Will the changes accommodate your future lifestyle (growing family, ageing, remote working)?

4. Market Value and Area

• Property Prices in Your Area:

  • Does the cost of extensions make sense compared to property values?

  • Does improving your current property push it beyond local price ceilings, reducing resale potential?

• Comparing Options:

  • Would buying a larger home in your desired area be cost-effective compared to improving?

5. Emotional Considerations

• Attachment to current home/location/community vs. excitement of moving.

• Stress and disruption of renovation vs. moving to a ready-made home.

Recommendations for Decision Making:

• Obtain multiple quotes from builders and architects to clearly understand cost differences.

• Find out about mortgage affordability and borrowing potential.

• Consult an estate agent to understand how each option impacts your home’s value.

• Consider long-term plans: Will this be a "forever" home or is a move likely in the coming years?

Summary of considerations:

• Do a rear extension if:

  • You need more living or social space.

  • You have sufficient garden space and value outdoor living less.

  • You plan to stay in your property long-term.

  • You are still going to be in a much better financial situation after completing the work.

• Do a loft conversion if:

  • You primarily need additional bedroom or office space.

  • Your property structure easily accommodates loft conversions.

  • You prefer a cost-effective way to add value with minimal land footprint.

• Move home if:

  • Your current property can’t feasibly provide the needed space.

  • Extensions significantly exceed local property values.

  • You prefer avoiding renovation hassle, and a fresh start aligns better with lifestyle and emotional needs.

Consider these points carefully, talk to professionals for quotes and valuations, and balance financial sense against practical, emotional, and long-term lifestyle considerations.