At a certain stage in your life, the space in your home may become inadequate. Maybe your home business is expanding and you need more space in your home office. Or, perhaps your kids are growing up and they filled the home with their toys, books, clothes and the rooms are now looking smaller than they once looked. Whatever the case may be, when you desperately need extra space, you have to choose between making an extension or moving to a bigger dwelling.
The decision to move or create an extension usually depends on factors such as the location of your current home, the need to stay close your workplace, the distance to your children's school and other vital amenities. Other critical factors involve the actual space available for an extension, the building costs and the ability to get finance for a larger home in a different location.
Let's take a look at the important things you need to consider if you decide to move to a bigger property or extend the one you are living in now.
When will moving be a better option?
Moving has a lot of benefits and sometimes it is the only feasible option. If you live in a condo or a flat with little or no yard space, you may be forced to move when you start feeling the need to expand. Also, when the cost of building an extension is higher than what you can afford with cash, moving to a more spacious house may be better.
Even when you can obtain finance for your new home extension, you need to be sure that you will be able to recover the cost when you sell the home. If the construction costs you $50,000 and the home is presently valued at $300,000 but you can only get a buyer to pay $325,000, then moving is a better option.
This does not mean that there are no costs involved in moving. When you want to move, you will pay a real estate agent fees to sell your property, in addition to other fees involved in closing the sale. When you find a new home, you will also incur moving costs and most likely spend money to re-decorate the house.
Besides finances, the reason for moving might be a need for a lifestyle change. If you are living in a condo and want to have a yard, then there is no need for any extensions. Before selling your condo, you may research the rental market in your area and list your property for rent. That way you will have an extra income and paying the higher mortgage will be easier.
How do you finance your move to a bigger home?
You can choose from different options to finance the move to your new home, including paying cash, selling your home or refinancing. Should you refinance your home loan it will allow you to gain access to the equity you have in your house. Lenders or brokers that provide loan refinancing can offer you up to 80 percent of your property's value. This will enable you to enjoy a lower interest with a longer loan term. But if you opt for a loan with a flexible payment option, you can still decide to re-negotiate the loan terms down the line and pay your loan back faster.
Where do you move to?
When you have enough funds to move to a larger property within the same neighborhood, you only need to work with your local agent to ensure you get a good property at a fair price. Otherwise, you need to consider refinancing your home and moving to a less expensive neighborhood where you can buy the size of home you want.
Most neighborhoods in the suburbs offer larger homes with plenty of space for you to expand as you need it. Instead of being constrained and trying to convert your garage into a room or home office, you will have many three and four bedroom homes with lofts and spacious yards. You will also enjoy lower property prices per square foot. A single family property in the suburbs could be priced lower than urban homes by up to $100,000.
When will extending your home be a wise decision?
If you live close to the center of your city and there's a high demand for your type of home, extending the home may be worth the high construction costs. You can dig to add a basement, convert your garage to a room, or create a bedroom in your loft. However, if your home is in a location with low population growth and low housing demand, it won't be worth the investment. Anytime you choose to extend your home, you must ensure that your extension will increase the value of your home significantly enough for you to reap the rewards when you sell it.
Comparing the costs of making a move or building an extension is not always simple. If you have some savings and you believe you can embark on a home extension, take the time to estimate all the total project cost, including the cost of taxes, obtaining permits and professional fees. Add all the costs to the current price of your home and see the type of home that is currently being sold at that price. You should also ask local real estate agents to give you an idea of the type of extension that will be appealing to future buyers.
When you are making a decision about moving to a larger house vs. making an extension at your current home, you should evaluate the cost and value of each option, research properties that can meet your need at a lower cost and consider whether moving or building an extension will offer you both short and long term benefits.