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You either need the extra bed and bathroom or you don't.
I mean there is a bit more to it than that? It would give better office space and a nicer master bedroom so we can have a decent guest bedroom, but is that essential? Vs a rear extension which doesn't give those things but makes the downstairs more pleasant to live, cook in etc.
Which of those is "need"?
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Edit; missed the other post.
Personally I'd say in your subsequent post you've given a series of very sound needs that imo outweigh the nice-to-have of a bigger living area. So I'd treat the loft as a priority.
Your first post read more as "it'll make our bedroom nicer". Which to me would (as Chris said) make an extension more important.
That should be a very quick/easy thing to work out no?
Loft = bathroom and bedroom(s) or office
Extension = more living space
You either need the extra bed and bathroom or you don't.
For us the greater thing is what loft + extension costs Vs. moving.