It sounds like a big and expensive project, but nobody can give you the right answer with so little information. Perhaps you should consider engaging a design professional to help you. You have about a million decisions to make ahead of you, and it can be exhausting doing all the research for each decision. The correct design professional can pull it all together fairly quickly after visiting your home and taking a brief, and you can be sure that the whole lot will be co-ordinated and complementary. My only suggestion from the information that you have supplied is to consider the new work to be in sympathy with the existing house (don't put a Hamptons style kitchen in a mid-century home), don't follow the latest fashion as it will date quickly, allow for lead times for tiles, and pay a lot of attention to your lighting. There are lots of suitably qualified professionals on Houzz so make direct enquiries to a few locals, and go with your gut feeling, Best of luck Dr Retro of Dr Retro House Calls

What a beautiful cottage, how many will be living there and ages. The Verandah/Bedroom 3, I can imagine has a different level sloping floor.? These spaces were often converte d to bedrooms/sleep outs, with single and bunk beds and worked well. As already mentioned the cottage is only 2 bedrooms. For me without spending what I haven't got, I would 1) keep the verandah as the Sleep out and open up between the kitchen and lounge with a long farm house table on lockable wheels so it can be pushed aside easily. 2) As suggested by OK turn the lounge into bedroom 3 and open up the kitchen to the verandah with 2 wide openings with a support in between for this external wall and the verandah becomes a small living area that can also be opened up to the undercover area weather permitting. When you are ready perhaps the old brick chimney could house the cook top and oven, as you said it's not a big house which I think is already perfect as you have that wonderful big shed. My ideal is a Small House with a big shed! Perhaps you could even find a smaller version of an old concrete laundry tub when you re do the laundry cheers

1) Consider your budget, your household, now and in the future, how long you plan on living in your home (which also relates to the risk of short term over capitalising). 2) Don't waste your time collecting images of beautiful $100,000 kitchens if your budget is $10,000. 3) Think about the big picture things, and get them right before thinking about the detail. 4) A good floor plan can't be resolved online without an understanding of the existing structure, environment, location, orientation and history of the house. These factors inform a good designer to prepare an appropriate design response. Removing a wall in plan may seem simple but there may be significant structural cost implications. 5) Make sure that all floorplans at the early stages include furniture so that you can understand how well it works (or doesn't work), sightlines, circulation and storage. 6) Engage a professional who is widely experienced with renovations and extensions to the scale, budget and style you are thinking about. Someone who can maximise your bang for your buck, who is also helpful, approachable and passionate about good residential design. Best of luck, Dr Retro of Dr Retro House Calls

siriuskey, Yes, the courtyard is open to the sky (no roof over it), I assume this is what you mean by double story. Ref. below photos, I would love to get this look, especially the first and last photo, where you can see family living space from the first floor. I can't achieve this in my plan as it eats a lot of floor space upstairs. The referred plan (photos) has a very big void combining staircase, hallway and dining area. I know it is not easy with cooling and heating when you have such a big void. So, I explored a few ideas (with my limited knowledge on this topic) before achieving the current floorplan. I have also thought about, in my current plan, extending the void on the staircase to the dining area (it is more like L shape) but i wasn't sure if that makes any difference. keen to hear your thoughts.