Downsizing your house during retirement could be a way to save money on bills and enjoy the simplicity of having less maintenance to worry about. You may have been thinking of downsizing but also be wondering whether it’s really worth giving up the perks you enjoy with your current house. If you’re still weighing up your options, take a look at our guide to the pros and cons of downsizing.
If you downsize your home, you could probably expect to spend less on your bills. As long as the house you move to is well-equipped with good insulation and so on, you should reap the benefits of having a smaller area to heat in winter.
The biggest saving on bills that you are likely to find is that a lower level of council tax is applied to you. A number of factors play into which tax band your property is part of, including the size of the house. By moving to a house that is two tax bands lower than the one you currently live in, you could save up to £800 per year.
If you downsize, you could have fewer household and garden chores, which leaves you with more free time to enjoy your retirement. The cost of repairs could also be lower, particularly if you are moving into a house that has been more recently built.
If you’re finding it difficult to maintain the garden or you anticipate having difficulties in the near future, a smaller property with a smaller garden may save you money on the costs of hiring a gardener, with such visits typically costing between £30-£50 each depending on the amount of work required.
Downsizing is your opportunity to explore a new area, put down fresh roots and make new friends. If you find an area with a stronger community and more activities that interest you, you could really maximize the enjoyment of your retirement.
If you’re unsatisfied with the amenities your current area offers or your proximity to the amenities that matter to you the most, this is also an opportunity to find a property that does provide the benefits you’re missing.
If you have a mortgage, you could reduce or remove your repayments by downsizing, meaning you have more funds available to spend on the things you and your family enjoy.
If you’ve lived in your home for a very long time, it is very likely that it has increased in value, which means you could really benefit from selling up on that front, too.
To counterbalance this, you will also want to bear in mind that there are certain costs associated with selling. These may include the agency fees paid to your estate agent for managing the details of the move, legal fees, a valuation fee, stamp duty, removal services and the costs of maintaining and improving potentially your old and new properties.
According to Slothmove, the average expenses associated with selling a house in 2022 amount to £8,755. The average expenses you can expect to pay when buying a house in the UK total £3,838 (and these figures are probably going to be higher if you’re buying or selling in London). Therefore, it’s good to bear in mind these costs when trying to determine how much money you could otherwise save by downsizing.
If the house you live in has been a family home and you’ve lived in it for decades, you might find you’ve built up a significant emotional attachment which makes it harder to leave. Understandably, this might feel too difficult, so this is another potential reason you might prefer not to move.
High House Prices
There’s a chance you may find that higher house prices are an obstacle if you’re wondering about moving house. If you’re thinking of moving to a retirement village or a flat or house in a highly desirable area, you may find that the prices are high and that you wouldn’t save that much by downsizing.
Financial & Physical Upheaval
Every house move requires a lot of upheaval. If you have a lot of things to pack away and you’re not sure whether a smaller place will have adequate storage, this is another thing you will want to weigh up against the positive aspects of downsizing.
The financial cost of moving also plays a part and you will want to be sure that you’re in a secure position to pay for the costs of estate agents, removal companies and more before you make the final decision.
How we could help if you’re thinking of downsizing
If you’re deciding if you should downsize your house in retirement so that you could access more of your funds, but you don’t want to leave your beloved home, why not consider Equity Release with Key Later Life Finance?
Equity is the market value of your home once any existing mortgage payments and any other secured debts have been repaid. Equity Release helps you release some of the tax-free money as a one-off lump sum or as a small initial release with further instalments as and when needed. This means you can continue to live in your existing home, with a loan that will typically be repaid when you move into long term care or pass away.
We have over 20 years of experience in helping over-55s in the UK with tailored equity release advice so that you can enjoy your retirement to the full. Get in touch with our friendly team today and see how we can help you.
Things to consider
All our equity release advice relates to Key lifetime mortgages only - a loan secured against your home
Equity release will reduce your estate’s value and may affect your entitlement to means-tested benefits
A lifetime mortgage may result in limited or no property equity remaining and will reduce your financial options in the future
The loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care
£899 advice fee only payable on completion