Five top tips for downsizing your home
1. FIRST STEPS
Once you’ve decided you want to downsize the first practical step is to talk through the complete process with a solicitor. They will explain that downsizing – like most other aspects of the property market – has changed considerably over the past five years. Those unable to fund the move out of savings or investments (the majority) will most likely be advised to sell their present home before buying a smaller one. Otherwise this will mean securing bridging finance, which is likely to be expensive and, downsizers typically being of a certain age, not as easy to secure as it was in their earlier years.
2. BE PREPARED FOR CHANGE
Downsizing often equates to moving from a family home of many years standing, so consider the emotional ties that bind you to such a property and the effect that leaving it will have. Also, think hard about location if you intend moving from your immediate neighbourhood. Will you still have access to family and friends; be close to a GP surgery, bank and post office? What about public transport and social facilities?
3. THE OUTLAY
Downsizing will incur all the costs associated with selling a property, including payment of stamp duty on the price of the new property, which for even relatively modest transactions can be considerable (eg: £9,000 on a purchase of £300,000). These factors will, of course, all combine to reduce the net surplus from the sale. However, set against this are regular annual savings made by giving up on the larger property, such as insurance, maintenance and the upkeep of the garden.
4. ASK YOURSELF WHY
If yours is a “lifestyle” choice (eg: substituting a difficult-to-maintain family home for a luxury, modern flat) then the financial savings from downsizing may be modest at best. Downsizing specifically to realise a cash surplus to supplement pension income will probably mean settling for a new home that is not only smaller but offers less comfort and fewer facilities.
5. TWO BETTER THAN ONE
If your mind is made up then do it sooner rather than later, especially if married or in a long-term partnership. Many couples have regretted delaying until one or both develop health problems and, as a result, their options become more limited. These options are further limited – and downsizing becomes even more stressful – after one of the spouses/partners dies. Almost certainly, two can downsize better than one.
l Andrew Stephen is head of property at law firm, Murray Beith Murray