Downsizing your home can save you significant money on your mortgage, reduce living costs, and provide you a more manageable living space.
However, before you take the leap to move to a smaller home, there are several things you’ll need to consider to make sure it’s the right thing for your circumstances.
Reasons to consider downsizing
An estimated 11 million people will downsize their home in the next 20 years. It’s not only those looking for their final retirement property who choose to downsize, either. Financial advantages, such as smaller mortgage repayments, are a huge incentive for many - but you may also want to think about downsizing if:
- Your children have grown up and moved away from the family home
- Your health requires a different type of home to aid continued independent living
- You want a smaller mortgage
- You want to release equity from your home for other investments
- You're planning a home for your retirement
A smaller home is cheaper to run – but you may not always save money by downsizing your property. For example, if you want to move closer to your family, you may need to downsize to afford a property in the right area.
Downsizing also comes with costs, such as fees associated with changing your mortgage deal. That’s why it’s important to think hard about moving to a smaller home before you take the first steps to do it.
Essential things to think about before you downsize
From understanding how to find or change your mortgage deal to determining just how much smaller your new house could realistically be, you’ll need to weigh up both the financial and practical pros and cons of downsizing.
Where does your mortgage stand?
If you already own your home outright and want to downsize, you may not need a mortgage. Some people choose to take out a mortgage even in this situation: they may wish to move before selling the family home, for example.
Do you already have a mortgage? What are your aims for your new repayments? Do you want smaller monthly payments or a reduced overall mortgage term? Knowing how much you could borrow – and how to do so – will help you to decide if downsizing is feasible for you.
Speak to your local mortgage adviser in Peterborough to find out more about your mortgage or remortgaging options to downsize your home.
Can you get a mortgage shortly before retirement?
Mortgages are often provided based upon the age you’ll be when the loan term ends – not how old you are when you first apply. This is because your income may radically change once you reach retirement age and stop working – which means you may not be able to afford your current mortgage payments.
If you’re reaching retirement and want to get a mortgage to buy a property, make sure you speak to a mortgage adviser first. They’ll help guide you with tailored advice about mortgages for the over-55s.
How many rooms do you currently use?
How much of your current home do you use regularly? Many people looking to downsize feel a smaller home will be more manageable and less expensive to run. However, if you’ll end up feeling cramped and unhappy, the cost savings can outweigh the financial advantages of a smaller home.
Think about how you use the rooms in your current home. Perhaps you have bedrooms for your children who have now grown up and moved away. What’s happened to these bedrooms? Are they junk storage rooms, craft areas, or still just bedrooms that aren’t used?
Also think about your living area. Do you need a separate dining room or will a kitchen-diner suit you better? Have you got enough bathrooms – or too many? If you know how many excess rooms or areas you currently have, it’ll help you decide if you could cope with a smaller home.
What do you love about your current home?
A great way to start thinking about downsizing is to highlight the elements about your home that you couldn’t live without.
For example, if you enjoy spending time in a sunny conservatory, you might want to add this room to the ‘must-have’ list when you’re looking for a new property. Or you might love the location: is it near to the local amenities, your family, or your friends?
Create a list of essential things your new home has to have. This will help you to find the right property when you downsize!
What problems will your current home pose in the near future?
As well as a must-have list, try writing a ‘not required’ one, too. For example, if your family-sized garden has become unmanageable or unused, you could add ‘excessive outdoor space’ to your list.
Think about how manageable your property will be in the next ten years, too. Are there several flights of stairs? Perhaps you don’t have a ground floor bathroom – but would like one to maintain independence as you get older. You could find your existing home is located too far from local amenities, public transport, or your family, too.
What hidden costs will you face?
The furniture you have at the moment might suit your existing home but if you’re moving into a smaller property, it might not fit.
Buying lots of new furniture for your new, smaller, home is a fun activity – but it can be costly! The same goes for any adaptations you can foresee the new property requiring, such as the installation of a wet room.
Is your current home in a decent condition to sell, too? If you’ve lived in your home for many years, it’s likely there are some repairs that need doing to make sure you get the best sale price. Factor these renovations into your budget plans.
Speak to a mortgage adviser to prepare your downsizing plans
It’s much easier to plan a downsizing move when you know your financial situation. A mortgage expert can help you to understand the lending options available to you based on your circumstances. They’ll help you to build a realistic idea of what lenders are likely to offer you, help you with the application paperwork, and make sure you have access to a wide number of deals across the market.
Book a free consultation with your local mortgage broker in Peterborough to start your downsizing research and make your plans for the next move.
Find out more about our Mortgage Advice service in Peterborough