Mrrzy, we've done both. If I were you I'd make an extensive wish list including photos and drawings of what you think you want with those parameters in mind, highlight those most important, draw out various versions of the dream house and then confer with experienced friends/ contractors/realtors/the local real estate adverts, etc. to see where in the range of things your dream house lies. From there you can further scale back the Wants to the Needs and see what your budget and the local market will allow.

Flexibility is a strength, and knowing what is really important to you will help you find your own path. Our choice this time was to build new based on just such a list/images. Two recommendations: 1. Don't get tied up in debt, and 2. Do your best to have the building and renovation done before you move in.