Posting the floor plan

Can you post some photos of your living area

Personally , I'd be reluctant .

You'll end up with a quite long , quite deep single garage , with a window ( the window is a bonus ) , but the resale will be less . You'll spend money on an internal wall , a front door presumably into the rumpus , and of course you'll have to buy a new garage door , frame it so it doesn't flex , etc , etc . Then theres things like splitting the lighting , putting in a door or two , so it will be getting up there $$$ wise , and also fairly dark , as there isn't any windows in the rumpus , except maybe a glass sliding front door . That may turn out to be a problem , as visitors may head there ? Without pictures , it's hard to know .

But it doesn't end there . You said about internal access , so are you doing a stair ? What about a toilet ? The bills are racking up , and it's still relatively dark , and probably worth less than at present .

The lounge area looks larger than average -- if you really wanted a rumpus area rather than just having the children play in the lounge or dining area ( where you can keep a bit of an eye on them ) , I'd be more tempted to spend my $$$ maybe taking out the front door , adding a wall across the lounge , fitting 2 smaller doors onto the front veranda ( or maybe even enlarging the hole and having 2 decent sized glass doors , or maybe even adding another tall narrow window near the entry and/or in the 'side' wall ( that would obviously depend on construction and load bearing beams etc ) .

Another option may be to utilise the alfresco area as a rumpus -- that obviously depends on your usage and priorities , and maybe even construction and safety issues .

IMO it would be easier to make 2 levels than to try for effectively a 3rd , but have lots of compromises . But it's your place , fill your boots !

Pottsy, I think the entry is half floor below living

I would consider a glass banister around the stair landing and leave it open if you are going to divide the garage. Or close it up and make a storage space over it to replace storage lost in garage for your bulky items.
You can put a window in front facade for more light. Ideally you would have 3.5 width for single garage to allow for some storage and movement.

It is worth doing for your own liveability creating internal access to garage and laundry, let alone extra living space, noting you can park cars side by side in driveway and have the single garage. It can always be converted back if new owners want 2 garage spaces.

Thanks Kate , yes I clicked to that -- basically , I was meaning that piece of external wall between the balcony and the entrance -- saying 'near the entrance' was my way of describing where I meant -- obviously a fail haha !

Living with two primary school aged kids I fully understand your need for a second living area. I’d definitely sacrifice half a garage for it. I think converting is a solid idea. I’m not sure on the costs of adding a staircase are but it’s worth considering. How do you use your existing living area? It’s quite large.

We have been paused thinking about all these wonderful suggestions and been busy with Christmas/school holidays but are now back on the planning track and hoping to get underway soon. I will attach some photos of our living areas and also the downstairs area we are planning to convert. We are going to replace the back roller door with timber French or sliding doors, undecided yet. And the plan is to build the wall straight across the middle of the garage. We will use the front space to store all bikes, kayaks, garden, shed stuff and use it as a workshop as needed and the back will be a very decent sized living space. We have never parked cars in garage, always had street parking so this isn’t something we need, but will build a very light stud wall so it can be removed if necessary for resale, although we are planning for this to be our forever house. Please Excuse the crude scribbles on the plan to show the room divide. We also haven’t done any major decorating in the living areas as we are waiting on doing the down stairs Reno so we can see how the area works with stairs. Any further suggestions on what I’ve mentioned are warmly welcomed please 😊

Downstairs area

Plan

Looks like your children might be very young. If so, they probably won't yet play downstairs unsupervised. Perhaps you could move the study area downstairs for a few years, and have the loungeroom half play area and half lounge. Then swap them over later.

another variation of previous suggestion ... the space above the new stairs could be open while kids are young and you need to be able to hear what's happening downstairs but you may find that you will eventually need to enclose the new stairs up to the ceiling with a fixed window to allow light into the stairwell and avoid draughts, restrict noise and retain heating but for safety the new stairs need a landing at the top so that you don't step straight out to a drop and access to the laundry through the storage room will depend on headroom below the original stairs