Deciding to downsize in order to prepare for retirement is becoming an increasingly attractive option to make. There is an estimated 2.5 million people in the UK that move into smaller properties in order to improve their cash flow and disposable income. However, you may be wondering whether it would be the right option for you. We have put together a guide to downsizing, explaining the main things you need to know about it.
Why should I downsize?
There are a number of different circumstances where downsizing could be worth considering. For example it is particularly popular option with ‘empty nesters’ whose children have now permanently left home, and therefore choose to downsize so that they can use the equity that has been raised to boost their income before, or during retirement.
Others may downsize as they are finding it difficult to get approved for a new mortgage, meaning they have no other choice but to downsize.
From a financial position, downsizing can give you a huge injection of cash, providing that you own the home outright and have paid off your mortgage. Equally if you have not paid your mortgage, you will be going to paying a lower monthly rate, which should free up some funds for leisure, holidays or to supplement your pension.
Plus, if you are planning a new lifestyle change whether it is buying a boat, new car, holiday or buying a place overseas, you can do so with the money you have freed up, without having to take out personal loans or similar.
If you are downsizing with no urgent debts outstanding, you can take your time with the housing market and find the best option for you. It is important to plan ahead and find a place that is accessible and easy to use for old age. Having large staircases or a long distance to park the car is not ideal for seniors.
It is worth telling your estate agent (if you are using one to sell your house) about your intentions to downsize. A professional might be able to advise whether you should move or consider making improvements to the home. One has to consider the turbulence of the property market and which option is going to yield the best returns.
If you would like to sell your property sooner rather than later, you could look at getting in contact with a specialist house buying service, who can considerably speed up the moving process on your behalf. Providing that you accept the offer and are happy with the terms and conditions, this could mean you end up moving into your new, smaller property in just a matter of weeks.
Things to consider when downsizing
Before you make the commitment of deciding to downsize, you should consider the following key points: