# How much should we borrow to extend?



## tommygirl (10 Jun 2009)

Am not sure if this is the correct forum so please feel free to move me.

We are currently speaking to an architect about getting plans drawn-up to extend a two bedroom cottage that we bought in May 06 for 250K (currently valued at 210K approx). We currently owe just over 200K.

We need to decide how much we can afford to build-on and I am not sure what factors we should take into account.

We earn 98K between us (about 1300 pw) and have one child but would like another 2 in the future (hopefully one next year) and currently pay 680 per month on creche and 800 pm on morgage. I am in the public sector therefore reasonably secure but OH unsure about job future. We have no debts and every penny of money we have in accounts adds to 50K.

What should the max mortgage payment be as a percentage of salary - should I just base it on my salary e.g. 60% based on an average interest rate of 5%.

I would appreciate any advice and will fill-in the form if required.
Thanks
Tommygirl


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## chlipps (19 Jun 2009)

Can you layout your post in the standard format for this forum? It will make it clearer for others to read. Not clear above what your salary is vs your partner.. if partner loses work, then can partner mind child and avoid the creche cost? has architect given any indication on cost to build the extension?


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## onq (20 Jun 2009)

Determine your needs re the extension.
The brief is a tool to determine your needs.
Your architect will help you formulate the brief.

The brief determines what you build and thus the cost.
On a small house you must use spaces to greater effect.
A chicken and egg situation will follow as costs are checked.
Site planning constraints may limit you as well as the build cost.

In the present climate you should be able to negotiate a good price.
Be wary of taking on too much of a mortgage - its a two bedroom cottage.


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## tommygirl (22 Jun 2009)

Age: 36 - take-home 620 p.w. after pension levy etc.
Spouse’s/Partner's age: 36 - take-home €680 p.w 

Annual gross income from employment or profession: €48000
Annual gross income of spouse: €50000

Type of employment: e.g. Civil Servant, self-employed 
Me - HSE admin staff
Spouse - Private Sector - production

In general are you:
(a) spending more than you earn, or
(b) saving? Saving €800 p.m. AIB parent saver

Rough estimate of value of home €210000
Amount outstanding on your mortgage: €203000
*What interest rate are you paying? Variable 2.25*

Other borrowings – car loans/personal loans etc None

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? 

Savings and investments:
€24K investec 6mths
€14K AIB on-line notice account
€9K Credit Union
€3K AIB parent Saver

Do you have a pension scheme? HSE Pension, Spouse no current pension

Do you own any investment or other property? No

Ages of children: 1 aged 2

Life insurance: Mortgage Protection Only

*What specific question do you have or what issues are of concern to you? *
Thanks for the replies so far. 
In reply, if spouse looses job he will be minding child at home - we would have no choice in that regard. 

The architect is proposing approx. 120K for extension and renovation and at the end we would hope to have a 1500 sq. ft, 4-bedroomed house on a 1.5-acre site in a rural village. 
We could try to sell at the moment and build on a site beside my parents which has been promised if required. Don't think we would have any takers at a reasonable price on our current property but could build a large house and have a smaller mortgage if we went with parents option. We need more space and I want to do something about this asap. Our house could be on the market a year or more!
Would it be madness to spend this much money extending our current property in our current situation? We would have a mortgage of approx. 300K on a steady income of 48000 or best case scenario 98000. 
Any views welcome - it is so hard to decide the best and most logical thing to do.
Thanks 
Tommygirl


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## chlipps (22 Jun 2009)

320K (current 200mortgage+120 extra mortgage) does sound alot for 1500sq ft house in current climate. Whereas for 300K, you would have substantially larger house on your parents site..maybe 2500sqft. If both sites are of similar acreage, standard as regards view, ammenities, local schools etc... then i think i would put house up for sale asap and apply for planning on parents site... if house sells early, you could rent? It would take 6-8 months min anyway to build extension and i think longterm a complete new house would be much better. If you decide on smaller house on parents site you could have it built for your current mortgage with small portion of your savings. Best of luck and keep us posted on what you decide


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## Smart_Saver (23 Jun 2009)

Hi 
We're building a new extension to our own place in city. Awkward site to build on. there is no back access and extension consists of back extension, garage removal at side (and going up one story here) and a front extension.
Got 4 builders quotes.
Dearest was 125 K and 16 weeks to build
Cheapest was 65 K and 12 weeks to build
Specs back on both are pretty similar.
Advice is to shop around at least a little - 
do you have easy access etc ? 
also cheaper and quicker to build Timber frame than block.
as well as that you have 2 small kids - presumtion is you are moving out so rental costs as well to consider for probably 3 months minimum. 
good builder should also come back with good suggestions and not justs to plan.
what is current size of cottage - going to 1500 sq feet gives plenty of rim for a family your current size. how many new rooms will you get. - I agree with chlipps - your 120K extra budget does sound a lot.


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## Mumha (27 Jun 2009)

tommygirl, what are comparable houses selling for in your area ? Have you fully researched this option of selling ? It looks like the financially best way and so what if it takes a year to sell .... it will still cost you less in the long run.


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## baldyman27 (27 Jun 2009)

If you already own a home, it may prove an obstacle to gaining planning on another site as you don't have a housing need. That's the case in my area, not sure if it's the same elsewhere. Worth checking it out though.


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## woodbine (27 Jun 2009)

baldyman27 said:


> If you already own a home, it may prove an obstacle to gaining planning on another site as you don't have a housing need. That's the case in my area, not sure if it's the same elsewhere. Worth checking it out though.


 
agreed. But depending on the age of the age of the OP's parents it might be ok. i believe there's an allowance made in favour of children building homes near to aged/elderly parents.


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