Downsizing is likely to become more common as the UK population ages.
Some of the reasons for it are to release equity or pay off a mortgage. Maybe you’ve become an empty nester, or would prefer a bungalow, or you’re looking to lower your running costs.
When should you do it, what do you need to consider and what are the costs? Here’s a downsizing your home checklist and some advice to help you.
What does downsizing mean?
Put simply, downsizing is selling up your home and moving to something smaller.
Why do people downsize to a smaller home?
Typically, downsizing is associated with people between the ages of 65 and 69, but this doesn’t have to be the case, personal circumstances as well as the following points can dictate a lot. However, it isn’t limited to the retirement community!
Downsizing can be a good way to save money, on everything from mortgage payments to maintenance.
Particularly for those who feel their living space is too large, for example their family home, downsizing can be an attractive option.
Smaller spaces are appealing to those with fewer family members to share with.
When should you downsize?
Property price increases often mean increased equity, so it can be a great time to downsize and cash-in on your home. Figures in April 2018 from Legal & General (L&G) show the number considering downsizing is 39% – nearly two in five homeowners!
A better choice of mortgage quotes has encouraged more last-time buyers to move. In theory, this is great news, as it will free up much-needed housing stock for people lower down the property ladder. But downsizing can be challenging, and like any home buying decision it can often require compromise.
Help downsizing your home: what to consider
You’ll not be surprised to read location is a crucial consideration. It can add value to your home, and determine how happy you’ll be living there.
What is your budget? You may not have a full time salary anymore and your savings may have to last a long time! There’s no denying it – the cost of moving can be high, so ask if you can you afford it?
Take note of the local market, is there demand from buyers? Are properties selling quickly or do they seem to be sticking? Do you think you will get a fair price for your home or might you have to accept a lower offer to move when you want?
Other downsizing home factors to consider
These aren’t the only things to consider in the downsizing process. Here are some more points:
- What storage space will you need? If it’s less than your current home then it’s time to declutter. Always take care to ensure the floor plan is accurate
- Increasingly, downsizers have elderly relatives too – it may be cheaper to have them at home than in care. Or maybe you expect regular visits from family and friends? You’ll need to factor in the extra requirement
- Are you looking for a switch from urban to rural or vice versa?
- Is being part of a community essential or do you want solitude?
- Transport links may be vital, as you get older and might not be able to drive – is the area you’re looking at well served?
- Do you want to stay close to friends and family?
Don’t forget to weigh up these considerations carefully before you prepare to move.
The costs of buying & selling
If you have a lot of equity in your current home, you may be able to buy your downsizer outright with no mortgage. Even so, with the average price of a house in the UK nearly £225,000 and associated costs of moving over £10,000 (such as stamp duty), you need first to work out if it’s worth moving at all.
Some developers of later-life housing offer to buy your existing home in part-exchange. Look at the numbers carefully though. It may seem an easy option, but you could get more selling it independently.
With just 7,000 later-life properties built last year, according to L&G, it is the most under-supplied area of the housing market. Nearly 50% surveyed said they hadn’t downsized yet because there were no suitable properties. According to the think-tank Demos, 30,000 new retirement properties need to be built just to meet current demand.
Downsizing checklist – getting organised
In such an undersupplied market it’s worth getting yourself organised – get your current home valued and seek professional mortgage advice about structuring your downsize.
Be sure that the area you wish to move to will serve you well; this may be your ‘Last-time Buy’. Our Property Report will help inform you if the location and indeed a specific property are going to serve your purposes.