Downsizing is something most of us will do at some stage. It is generally a big change so when that day comes, making a well-informed decision is important.
- It makes financial sense. Downsizing allows you to free up cash that is currently held in the equity of your home. If you have a mortgage this could mean you can reduce it, or eliminate it altogether. It might be that you will have surplus cash from the sale to add to your retirement savings. Another thing to consider is that smaller homes generally cost less to run, meaning your regular expenses are lower.
- It gives you more freedom. With a smaller home and outdoor area you won’t need to spend the time and effort that you do maintaining a large home. This will give you more time to enjoy life rather than being a slave to your home. Downsizing can provide a lock up and leave option, allowing you the freedom to travel and not worry about your home.
- Choice of location. Smaller properties are more affordable, so you can potentially buy in the area you like and still have change left over.
- No more wasted space. Once the kids have moved those extra rooms often sit empty, so you are maintaining what you no longer have use for. And if they haven’t moved out yet, downsizing can be a hint to those grown up children who are still a bit too comfortable at home!
Buying and selling real estate is a major undertaking so when you are ready to downsize you want to make sure you get it right. It is important so make sure you do your research about where you want to live and what that area offers. Do you want to stay in the same area that you are currently in, or are you looking for a change? If you are looking for a change do you want that to be in the city or a regional area. Current trends show that unless people are looking for a total sea change, they tend to look for smaller places in the areas they presently live in.
You also need to consider the type of property you want to downsize to. Apartments and townhouses are very popular options.
Apartments offer a very low maintenance option where your outdoor space usually consists of a balcony area or a small courtyard. An apartment tends to have more security which means you feel safer in your home. It is also beneficial in the event you want to travel. You can simply lock the door and leave without worrying.
A townhouse is generally a larger property than an apartment and is often in a smaller development. They are usually built across multiple levels and can have more of a house-like feel than an apartment. They tend to have a larger outdoor area, making entertaining family and friends comfortable but still remaining a relatively low maintenance option.
One thing to consider when downsizing is the cost involved in buying and selling. In particular, the stamp duty payable on the new property can be considerable. However, this is dependant on the type of property you purchase. For example, if you are purchasing a property off the plan these often have a significant reduction in stamp duty, whereas a fully established home will generally come with full stamp duty payable.
To help make your transition to a smaller property, make sure you have a trusted property adviser on your side. A good property adviser can help you source a property according to your lifestyle and budget. Contact us to find out more.