Is downsizing the right choice for you?
There comes a time for many homeowners when they need to make a decision. Typically, the children have flown the nest, and they honestly don’t really need the huge family home that they have lived in for many years. Sound familiar? If so, you might be thinking about downsizing your home and living somewhere smaller and more manageable.
There’s another possibility – some homeowners find that despite the fact that they love their home, they have found themselves where they need to reduce their expenses or boost their income. And selling the property and downsizing can be a very effective way to do this. But it is important to remember that downsizing is not the right choice for everyone.
Here we take a look at the advantages and disadvantages of downsizing, as well as the range of other possibilities to help you establish whether it might be the right choice for you.
The pros of downsizing
The first and most obvious benefit of downsizing is that you can increase your cash flow. You may be tied in to an expensive mortgage, and if you are approaching retirement it can be difficult to see a way that you are going to be able to afford to pay for it. Downsizing can allow to move to a more manageable mortgage, or even buy a property outright so that you no longer have to worry about monthly repayments.
It is also worth noting the additional benefits such as the fact that it is easier to clean and maintain, and you will also enjoy lower utility bills. But perhaps the next most important point is that it means you avoid getting into a complicated financial contract that might be involved with something like equity release (more on that later).
The cons of downsizing
Of course, downsizing can be great, but it won’t be an ideal solution for everyone. Firstly, it will probably mean reducing the number of belongings you have, as you will have less room to store them. This can mean facing some difficult decisions as to what you get rid of. It will also mean having to get used to the idea of having less space, making it harder to get your own space away from family, and not having the room for guests to stay.
You will also have to adapt to lifestyle changes, which can be a real adjustment for homeowners. If you don’t cope well with change, this can be a big deal. Even more challenging can be the idea of having to leave behind the memories in the home that you brought up your family in. This can be emotionally painful.
No matter why you are considering downsizing, you will find that there are a number of different options available. One of the most popular is equity release, but it is vital you fully understand it before choosing it.
Financial specialists Reeves Financial describes equity release as ‘the broad term for a variety of products that allow people over the age of 55 to release some of the equity that is currently tied up in their property’. Functionally it can be a great option for those looking to boost their income or receive a lump sum while still being able to live in their property.
Of course, it is important to state that you should always take financial advice before choosing equity release, as there are many different products available and it can be confusing trying to choose the right one for you.
Another possibility that you could look into is the idea of multigenerational living. This is the concept of many generations of the same family living together. It is an idea that has gained a lot of traction in recent years as younger people have found it more difficult to get mortgages, and older people have struggled with isolation – it can benefit everyone.
It may be that you are interested in downsizing for a huge variety of reasons, but it is also crucial to remember that there are many other options too. Make sure that you consider all of them carefully before taking this huge decision.