I'd like to create a master and ensuite in our house but can't decide between 2 options. I've attached a rough floorplan. Our house is a Federation workers cottage with a 2 storey 90s extension (from the door at end of hallway backwards).

Option 1 - convert the formal living room into ensuite and walk in robe. This makes sense as we are currently using the adjoining front left room as our bedroom. I presume plumbing could be connected from the downstairs bathroom. We'd also be adding value with a 3rd bathroom. But downside is that the original part of house has lovely period features and it'd be a shame to convert it. We also use the formal living as TV room but could move this into the open plan living instead.

Option 2 - extend and renovate 2nd storey into proper master and ensuite (the current 2nd storey is a loft style so not much privacy, and is not very big). I think this would be more expensive as we'd need to extend into the roof space of the original house, add skylight, and renovate the existing bathroom. But at least the plumbing is already there.

I would love to hear other people's thoughts, and if there's something I haven't factored, please let me know. Thank you!