Downsizing your property, from a larger one to a smaller one, can be done at any stage in your life. However, downsizing is most popular with those in, or approaching, retirement. In this article Mark Hempshell looks at some of the things you need to bear in mind if you’re considering downsizing.
The most important thing about downsizing is to think it through carefully first. First of all, let’s look at the pros and cons of downsizing ….
The main advantages of downsizing are the opportunity to reduce your home running costs, reduce future maintenance bills, save on maintenance work and time (everything from cleaning to gardening), perhaps avoid large maintenance bills on your current property and also to release some capital as a result.
The main disadvantages of downsizing are the costs of doing it (which in some cases could eliminate the savings you’ll make), the difficulty of finding somewhere you really like, adapting to a smaller property and the time and effort the whole project will demand.
There are some other pros and cons of downsizing that are difficult to quantity. Downsizing can afford an opportunity to closer to family and friends if you wish to. It can also offer an opportunity to move to a new area, with new opportunities for new experiences and the chance to make new friends. On the other hand moving, by definition, involves leaving old memories behind and can also be extremely stressful.
So …. have a good idea from the outset exactly why you want to downsize, as this will affect how you downsize, or even whether it’s a good idea at all. Is it for financial reasons, personal reasons or something else?
If you decide you’re interested in downsizing here’s some advice you might find useful:
* Decide approximately where you’d like to downsize to. Remember that the supply of suitable property in any given area will probably be limited so whether you can downsize at all will to some extent be governed by whether any suitable property for sale is available.
Would you like to stay in the same area, or try somewhere completely new? Jot down a shortlist if places you like, and why you think you’d like to move there.
* Decide what type of property you’d like to downsize to. Again, availability of that type of property could be the key to the whole move.
Would you prefer a house or flat, or maybe a bungalow? Detached, semi-detached or terraced? Old or new build? Would some kind of retirement property suit you …. or would you not be interested in this at all?
Check newspapers and websites for the area concerned. Is such property available? What is it likely to cost?
Consider viewing any available properties in the area concerned now. Even if you’re not ready to make a commitment as yet this will inject some reality into the situation and help you decide if downsizing really is for you.
* Draw up a ‘wish list’ for your new home (and new area). Make a list of ‘must haves’ and ‘nice to haves’. For example, how many bedrooms do you require? Would you like a garden or not? How close would you like to be (or not) to local facilities such as shops and transport?
In property it’s usually a good idea to think longer term, ie. 10 years ahead. Think about how your new property and new location might suit you then.
* Next start to put a rough budget together. Work out how downsizing is going to work financially.
Know what you have in the pot to spend. Obtain several valuations for your current property from estate agents. Deduct any mortgage balance that might be outstanding.
Find out what your new property is likely to cost. Obtain estimates for legal fees of both buying and selling, stamp duty on a new property and removal costs. Estimate what other expenses might be involved, such as new fittings/furnishings/decoration or any building/maintenance work that might be needed.
Now reassess your budget. Will there be money left over from your downsizing? If not, will you need to make an extra contribution from savings etc.? If there is ‘spare money’ left over what will you do with it? (Bear in mind that in the current climate money in property is generally much more productive than money in the bank!)
Lastly, make your decision. It’s probably going to be impossible to make a decision to downsize based entirely on either financial or personal criteria. Rather, on a combination of factors that just seems right for you.