23 October 2015

The pros and cons of downsizing your home

Thinking of moving to a smaller house now that the children have flown the nest?

We look at the case for and against downsizing, and the next steps to take if you decide you’re ready to make the move.

Gaining financial flexibility

One of the most compelling reasons for downsizing is financial. Selling your home for a cheaper one could free up money. A smaller house could also mean lower utility costs, council tax and other expenses.

These extra funds can potentially finance your retirement dreams such as travel, hobbies or other adventures. Others find it an essential way to catch up on their retirement savings.

The option to increase accessibility

Downsizing is a great opportunity to think ahead and buy a more accessible house, especially if you don’t plan on moving again.

Even if you have no trouble getting around your home now, there may come a time years from now when stairs or narrow hallways could be a problem. Downsizing while you’re fit and healthy cuts one potential source of stress and can be much easier on the budget than trying to adapt your old home.

Saying goodbye

One major con to downsizing is parting ways with many of your old things. Sorting through the possessions and memorabilia you’ve accumulated over the years may be difficult in the moment, but many find such a clear out liberating once it’s done.

Also, if you plan to move to a new city or neighbourhood, you’ll have to say goodbye to some friends and neighbours as well – although you’ll gain the opportunity to make new friends and neighbours. This is an especially appealing prospect if you’re moving to a community with many other retirees.

Losing a gathering place

Keeping your old home does make it easier for your children and grandchildren to gather for the holidays and other special occasions. Whether this occasional use is enough to justify keeping the extra space year round is a factor you’ll have to weigh up yourself.

This issue may be less of a concern if you decide to move nearer to your children. Alternatively, you could look for a place with a spare room (or two) for when the family comes to visit.

What about upsizing?

An empty nest doesn’t always encourage people to downsize. Now that the kids have left home you may find that you have more disposable income and fancy moving somewhere larger – so that grandkids or elderly parents can stay with you, or maybe somewhere with a bigger garden if you’ve got more time on your hands.

Next steps

If you've decided that downsizing, or indeed upsizing, is the right choice for you, here are some ways to get started:

  • Start sorting your things
    The earlier you start reducing your possessions, the less stressful it will be. Starting with this step can also help you confirm whether you’re on the right path. If parting with old keepsakes is too painful, you may want to rethink whether moving is the right choice for you.
  • Think location
    With no job to tie you in one spot, the world's your oyster. Do you want to move closer to your family?
  • Narrow down neighbourhoods
    Once you know generally where you want to live, you can start researching specific areas or neighbourhoods. While access to good schools may no longer be important to you, you may want to look at safety, access to good healthcare and a lively social scene.
  • Get a sense of your financial situation
    At this point, you'll want to talk to your financial adviser or bank or building society about financing the deal. If you're still paying off the mortgage on your current house, you’ll want to talk to your lender about whether your loan is portable.

Find out more

For more advice to help you through the process, from arranging financing to completing the sale, read our buying and owning a property guides.

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