Downsizing your home can be a real opportunity to free up equity and have more time on your hands.
In some stages of your life, buying a bigger house to accommodate your growing family, for example, makes sense. But the opposite is true, too. If a change in your life now means that your home is too large, downsizing to somewhere smaller could be the perfect move.
When is the right time to downsize your home?
The ‘less is more’ mindset can kick in at any stage of life. While you can downsize at any point, you will need to be ready to embrace your inner Marie Kondo and really pare down your possessions ready for the move. If this feels too challenging, downsizing might not be the right move for you – just yet.
For some, they want to downsize to have a little extra cash in the bank for their retirement, while others simply don’t want to rattle around a big home once all their children have flown the nest. Some homeowners are looking to release the equity they’ve built up in the family home to help their children get on the property ladder.
A good sign that it’s time to downsize is when you find you no longer need all the space. Whatever the reason, we’ve weighed up the pros and cons of downsizing to help you decide if it’s right for you right now.
Potential advantages of downsizing:
- Increased cash flow: If you’re spending less on mortgage payments, you’re likely to have money left over every month to spend on other needs and desires. Depending on the property, you could pay cash for a smaller home from the proceeds of your existing home.
- Lower physical burden: A smaller home requires less maintenance, saving you time and energy. If you don’t want to mow the lawn or clean umpteen bedrooms, a smaller property will offer you a shorter to-do list. If you go one step further, apartment living comes with few responsibilities as major maintenance will be taken care of by the building’s own team.
- Lower utility bills: Generally, it costs less to heat a smaller home, such as a bungalow or terrace. Reducing your energy consumption is not only good for your wallet, but the planet, too.
- Reduced consumption: Even better news for your wallet is that there are fewer places for furniture, appliances and consumer goods, so you’re much less likely to splurge on new items.
- Less stress: It can feel that the bigger the house, the bigger the stress. By downsizing, you reduce your responsibilities – taking a weight from your shoulders. There can be added physical benefits, such as less strain on your mobility, more time to relax and fewer expenditures.
Potential disadvantages of downsizing:
- Fewer belongings: Moving to a smaller house tends to require you to purge some possessions. That means selling, donating or throwing away some furniture, kitchen supplies, books and other personal belongings. Before downsizing, you’d need to sort through your items to ensure everything would fit in the smaller house.
- Relocation: Moving further afield may free up some equity, but it does mean leaving the area you’re attached to.
- No room for overnight guests: Hosting a huge summer party may be out of the question. If you don’t have a spare room handy, your out-of-town guests may need to camp out on the sofa or check in to the nearest B&B when visiting.
- Lifestyle changes: Trading down means changing your lifestyle. While many people are adaptable, some are resistant to change and find more comfort in the familiar. After years of living in a larger house, you may feel that a smaller home feels claustrophobic and poky.
Should I relocate when downsizing?
Consider where you want to live. Do you want to stay in the same area, move to the coast or buy a luxury flat in the centre of town? While your finances will limit your options, you may need to look in different areas to get your money to work harder for you.
The top cities that offer the largest savings when downsizing include:
Start your next chapter
The decision to downsize is personal, and only you can say what’s best. If you’re looking for a smaller home for sale, start by finding out how much you could get for your existing property. Book a free house valuation to find out the equity in your property.