Downsizing Your Home to Release Equity
Selling a house to downsize brings a wealth of benefits from the practicalities of having less space and fewer rooms to maintain, through to saving money on annual household bills. And in most cases, selling a house to downsize will also generate a monetary profit for the seller to enjoy!
There’s a perception that selling a house to downsize is an approach only taken by retired homeowners whose families have flown the nest. In fact, the concept of downsizing your home is more common than you think across a wide sector of homeowners.
Why downsize your property?
Less time to spend on maintenance – trading a larger property for something smaller will inevitable reduce the amount of time you spend on household ‘chores’. In this day and age, most of us lead busy lives and the pressure of keeping on top of a large property can be an extreme burden. This burden can be intensified if you have the additional issues of ill health or live alone.
Reduce your monthly outgoings –Selling a house to downsize makes a lot of financial sense. This is one of the main factors why downsizing is growing in popularity. Trading down will reduce make a big difference to your monthly outgoings. Regular expenses like council tax and energy bills will decrease when you move to a smaller property, leaving you with more disposable cash to spend on loved ones or save for a rainy day.
Release the equity in your house–Property inflation has soared over the past two decades, and those luckily enough to get their foot on the property ladder at the right time,can reap the financial benefits of selling a house to downsize, enabling then to free up any equity tied up in their homes.
How to decide if it’s time to downsize
Knowing when it’s the right time to downsize your homeis a very personal affair. For some, the right time could come when the kids have flown the nest while others are driven by financial reasons like downsizing to pay off debt.
Some of the most common reasons that drive a property downsize are:
- The children have grown and moved out, leaving you will empty rooms to maintain
- You are in financial difficulty and want to reduce your monthly outgoings
- You have a lot of equity tied up in your house and you want to sell up, downsize and release some equity
- Too much upkeep! Keeping a large home clean and tidy is hard work and for some can instigate a trade down
According to a recent survey by Retirement Move, 64 is the perfect age to downsize your house. Based on a survey completed by 1,000 homeowners, the research concluded that people aged 64 are the perfect group to downsize because they are not only still mentally agile enough to deal with the house sale process but also benefit the most from disposing of unused space. The survey also highlighted the main factor that prompts a downsize decision in this particular age group was all down to struggling to keep up with the maintenance of properties with multiple rooms and large gardens.
Types of property ideal to downsize to…
There are many property types that would be ideal if you are considering a downsize. Technically, if you are downsizing your home, any property type smaller than your current home would be classed as a downsize, however there are property types that are built specifically for manageable, easy living…
- Move to a smaller traditional house
- Move to a Bungalow style property
- Move to a Park home
- Move to a Retirement Village
Once you have decided which onward property type suits your downsizing plans, the best thing you can do is put yourself in as proceedable position as possible. Chain-free buyers for example, will probably be given president over a buyer who is stuck in a chain of sellers. Being one step ahead of the competition will give you a huge amount of power to negotiate and seal the deal.
Top tips for selling a house to downsize
Selling a house and moving is a stressful process at the best of times, but selling a house to downsize can bring added complications. When moving to a smaller property, inevitably, you will have less room for your personal belongings, meaning you’ll need to be super organised, have a good clear out and a be a bit ruthless before you make the move!
Before committing to a new smaller home, it is advisable to sit down and hatch out a through plan regarding what possessions you currently have; what you want to keep and what can go. Once you have established what possessions are important to keep, you can start your search for a smaller property that meets your needs and can house your possessions!
Once a firm decision has been made to downsize your property to a smaller home, you’ll need to think about the best way to sell your current property….
Sell your existing home on the open market
Selling your home on the open property markets by far the most common approach taken by sellers. However, selling your home on the open market does not come with any guarantees. The average time it takes to sell your house on the open market in the UK is currently at 295 days. You also need to consider that 1 in 3 house sales fall through before completion. This can add additional time and stress to an already stressful situation. Especially if you have found the house of your dreams and want to secure it quickly.
Selling your house at auction in order to downsize
Selling a house at auction is a good choice for people who are looking to move fast. But just like going down the open market route, there are no guarantees a house sale will be achieved. Property auction houses will apply a listing / marketing fee and will also take commission if a sale is achieved. If a house sale at auction isn’t achieved, the listings fees will still have to be sold, so there is a chance you could be out of pocket.
Sell your home to a cash buying company
You could choose to sell your house to a professional house buying company. Companies that directly purchase houses, buy at a discount to market value, however this is the only route that gives house sellers a guaranteed sale. This method works well for people who have built equity up in their homes and want to move quickly.
If you are considering selling to downsize, you may find our downsizing check list useful:
Plan ahead – before you downsize:
- Buy a new notebook to create lists purely for the house downsize and move.
- Write a list of pros and cons to consider surrounding your property downsize.
- Create a furniture inventory. Highlight items on the inventory you have to keep. This should help you identify how much space you will require with your next property.
- Think about beginning a house declutter! Decluttering a house can take considerable longer than you think. Most of us have lofts, garages and cupboards full of memories, but do you really need to take it all to your new home? (especially if you are downsizing your home) Moving house is the perfect time to have a good clear out. Even if you start this process 6 months before your planned move, it wouldn’t be too soon!
- If your children have already flown the nest, don’t allow them to use your home as a personal museum of their lives. This is your perfect opportunity to hand back those boxes of old school books and record collections!
- Time to get shredding. Lots of us tend to hold onto old household documents and paperwork. Granted, some household documents are important and should be retained in a safe place, but having a whole filing cabinet full of old utility bills is totally unnecessary. It always advisable to shred any unwanted documentation rather than throwing in the bin to prevent identity theft!