Five benefits of downsizing explained
The pandemic has made many potential downsizers – particularly older homeowners – consider their options, according to mortgage lender, Together.
The specialist provider said that some older homeowners may want to stay put in their larger homes for the extra space and to be near family, friends and other support networks. But others may be looking for a change and considering buying their ‘final forever home’ soon.
There can be benefits to downsizing, as Scott Clay, distribution development manager at Together, explained:
1. You can access the equity in your home
According to Sunlife, the average over-55 has around £135,000 equity in their home, which could help you with living costs or help you make the move to be nearer grown up children and grandchildren.
2. You could save money on bills and upkeep
The bigger the house, the more you’re likely to be paying on general upkeep, repairs and monthly bills. Expenses like council tax and utilities are likely to be lower for a smaller property, so you could find that downsizing saves you money month-by-month, as well as freeing up a chunk of cash from the equity you’ve built up in the property over the years.
3. You can find a space that works better for you now
We need different things from our homes at different stages in our life and it’s important to keep reassessing what you need, now and in the future.
Would it be easier if all your living space was on one level rather than two, for example? While it can be hard to let go of the memories a house contains if you’ve been there for a long time, thinking practically about space could really help you focus on what’s right for you and your life, right now.
4. You can clear the clutter
Nothing focuses your mind on stripping back to the essentials than moving in to a smaller space.
Having less space to store clutter means you’ll have to be ruthless. Though the thought of tackling the contents of the garage or loft that have been gathering dust for years might be enough to make you stay put…
5. You can spend less time cleaning
Keeping on top of the housework can be a challenge at any point in your life, so why do more of it than you have to? A smaller home means less surfaces to dust and less floors to vacuum, leaving you more time to enjoy this new phase in your life.
Scott Clay, distribution development manager at specialist lender Together, added: “Location remains the most crucial factor for downsizers, and the big challenge is that the UK simply doesn’t have enough suitable properties in the places where they want to be. So, until changes are made to encourage them to move out of family-sized homes to make way for the next generation, there will continue to be intense competition for these types of properties.”
He said that while there is a demand from ‘last time buyers’ to find their forever home, access to finance was a barrier to them achieving their ambitions, with banks’ rigid lending criteria too often locking out older people from their dream move.
“Fortunately, there are finance options for older borrowers available from specialist lenders,” he said. “We see borrowers who not have quite enough equity built up in their property, so require a small manageable mortgage to help them into their new home. In these situations, we can look to provide home loans to borrowers who are aged 85 at the end of their term, depending on whether the loan is affordable for them. We’ll also look at pension and benefit income for older borrowers, as well as considering mortgages for retirement properties, whereas very few banks will, as they often have an age occupancy restriction which limits the resale market.”
He added: “Some downsizers will use short-term finance, which is not offered on the high street, to purchase their new retirement home quickly, for cash. They choose to take out a bridging loan to seize the opportunity for them to buy their chosen property and repay the finance when their existing large home sells.”