What do you think of when you hear the word downsizing? Is it what parents do when the kids move out of the family home and mom and dad purchase a smaller home with fewer rooms? It may just be that you are eager for a change, want to simplify your life, want to move closer to friends or family members, or want to start a new phase in life. Whilst many people have been trying to upsize throughout their home-buying journey, downsizing can offer so many options! There are certainly more scenarios where downsizing your home could be a wise decision.
“Are you looking for something smaller, or are you looking for something cheaper?”
Downsizng and buying a property doesn’t come with a manual. Between a complex market, and a lack of time and expertise there is a lot that goes into downsizing.
People downsize for all sorts of reasons, many times retirees aim to free up some of the equity they’ve earned over the years to spend in retirement. Others, are worried about the onerous responsibility of maintaining a large home at a time when one’s physical health may begin to deteriorate.
Before you get ahead of yourself, you should sit down with a financial adviser and create a roadmap for you and your husband. Once you have a retirement plan to downsize, start budgeting how much you’ll need to get by. So determining what you can afford is an important starting point, especially in as competitive a housing market as this one. Then get in touch with a buyers advocate to guide you through the property process.
What are the advantages of downsizing?
There are lots of advantages to downsizing your home. Firstly, if you’ve been in your current home a while, it’s likely to have increased in value, and you may be near to paying off your mortgage, if not having paid it off completely.
Buying a smaller, cheaper property will give you a lot of equity left over, to use for whatever you wish. It also means you can buy your new home as a cash buyer, giving you more options, a quicker chain and the ability to live mortgage free.
Downsizing to a smaller home means less upkeep, lower bills and more time to do the things you love. It’s an exercise in saving both money and time.
If you are downsizing in later life, it means you can choose a property that will be better suited to your needs as you get older. Instead of having to contend with your stairs, limited accessibility or a huge garden requiring maintenance, you can pick a property that can work for you.
So why wouldn’t you downsize?
Some people have got used to a home of a certain size and space, and perhaps nothing they look at really appeals. It can be hard, after years of aiming for more space to decide to move somewhere smaller. Perhaps everything seems poky, or you can’t imagine how you could ever fit all your items into a smaller property. It’s natural to be resistant.
Property values change over time, which should be great if you’ve had your property for a while. You may find that your property has increased in value, and you should have a lot more to work with when looking for a new home. However, just because you want a smaller place, it doesn’t mean you necessarily want to change your location. You may struggle to find a smaller property in your area or feel that even the smaller homes are too expensive for you to truly benefit from the sale. If you want to be in the same neighbourhood, or to be near family, you may find there aren’t many downsizing opportunities.
A downsizing checklist
- Consider your reasons for downsizing? Is it necessary, are you happy about it, or is there another solution?
- If you’re excited to downsize, consider where you want to live. Do you want to stay in the same area, move to the seaside, or buy a luxurious apartment or unit?
- Look at the type of properties that would work for you, and whether you can afford them. Will you have to make a compromise or is there a lot for you to choose from?
- Consider whether you want to pay off your mortgage fully before you sell the property.
- Start throwing things away – donate, give items to family members and separate out the items that you really love and feel strongly about from those you don’t really need. It’s an opportunity to clear everything.