Britain occupies a unique position among European nations. According to the English Housing Survey, the country has 8.1 million owner-occupied homes with at least two unused bedrooms each. Most such homes are lived in by empty-nesters — the elderly who have retired, people whose adult children have moved away on their own. Technically, these homeowners are losing money. They could be paying lower property taxes and smaller utility bills. All they would need to do is to sell their home and move to a smaller home.
Certainly, some retirees do upsize in retirement. They have children with their own families, and they would like to have room for them when they visit. In most cases, though, extra space tends to simply go to waste. Selling and finding a smaller home to move into can lower costs, and put money in the bank. It does take a lot of homework to get a downsizing right, however. It’s important to think of every angle.
Finding a new home in the new area
For most people who downsize, cost-cutting is their prime motivation. With real estate prices booming, even modestly downsizing can help free up a great deal of money. Yet, moving to a smaller home doesn’t always result in lower costs. It’s important to make sure that you don’t wipe out your savings moving to a place with very high property taxes.
It’s also sensible to make thorough calculations when it comes to selling and buying. It doesn’t come cheap, after all. You need to pay for a broker’s expertise, for home inspections, a solicitor’s time, and a dozen other charges. Not to mention, a new home may take home improvement expenses, new home decor and so on. It’s important to take every detail into account when you make up your mind whether downsizing actually saves you the money that you hope.
It could make sense to rent sometimes
Buying isn’t the only option when you go looking for in a smaller home to live in. You could rent, a choice that could especially make sense at this time when property prices are sky high. Renting can also make sense if you have more than one child. You do have the freedom to move to live close to one child or another. For other considerations, you can use a rent-or-buy calculator online, or ask a trusted real estate broker for advice (Bairstow Eves has more info).
Downsizing can allow you to move to a more appropriate home
While moving out of the house that you’ve raised a family in for decades can be painful, you should consider the benefits of moving. Aging in place is all the rage today. When you move, you could find a home that is more appropriate to your needs as a senior. Modern homes are likelier to have wide hallways, slip-resistant flooring, step-in baths, and step-free layouts. Homes that are were built in the 50s and 60s tend to be difficult for the elderly to navigate.
You could be free of your mortgage
Many people tend to be free of their mortgages by the time they retire. In some cases, though, significant mortgage burdens do exist well into retirement. If this is the case, it isn’t a smart move to keep yourself under this kind of burden. Instead, it makes sense simply to give up and move to a smaller home.
Home Loan Options Consist of More Than Just Traditional Loans
Home loan options consist of more than just traditional loans, especially if you are retired. Reverse-mortgages, which are only available to people of retirement age, are loans which pay the borrowers each month out of the values of their homes. If you are such a homeowner then looking into reverse loan disadvantages and advantages can help you decide if one is right for you. For example, a reverse loan is almost impossible to default on and will allow you to continue owning your home as long as you continue living in it. However, such a loan may have a high-interest rate and leave your family without an inheritance if they choose not to pay any existing balance after you die or leave the property.
Your home is an investment, not a keepsake
Many people find it hard to let go of their home, simply because they tend to be attached to it. While there’s nothing wrong with an emotional bond, it can be inconvenient to pick the biggest asset in your portfolio to feel this way about. Books such as Using Your House for Income In Retirement detail how using a home as a source of retirement funds can be a smart move. Not only can you put more money your pocket when you sell and downsize, you can lower your exposure to the uncertainties of the real estate market, as well. Certainly, prices are robust at the moment. It wouldn’t take a lot for the real estate bust of 2008 to happen again, though. It makes sense to not leave yourself open to such risk.
Renting your property out is an option, as well
If you hate the thought of selling your home, there’s always the option of renting it out, and going elsewhere to rent a home yourself. You would get a steady monthly income out of your home right away, and since you’d be renting a smaller home, you’d make money off the deal.
Martin Garcia works as a real estate agent and has recently helped his own ageing and frail parents downsize from the family home into assisted living accommodation. Planning ahead for his own retirement too, Martin has written some retirement focused articles which you can read online.