As Mortgage Brokers we are lucky enough to assist many Australians with the huge milestone of first home ownership. We then follow quite a journey which often involves upgrading homes, purchasing investment properties, and chasing the best home loan deal in between. We have been around long enough to also understand that there are a few points in life where your home may no longer suit your lifestyle and/or financial needs. Always consider the backend of a property journey, particularly in the later years when your property may outgrow you and your lifestyle.
Downsizing can be the ideal way to save money in these later years and help guarantee a comfortable retirement. In addition to paying less for a smaller home, Australians can also reduce other bills, like those relating to heating and cooling a large abode or maintaining a big front yard.
For people who have found themselves holding on to one too many possessions over the years, downsizing also presents the perfect opportunity to ‘clean house’ and figure out what’s truly important.
Why would you consider downsizing?
1. Debt reduction
If you’re heading toward retirement and you still have a way to go with paying off your home loan or debt position, downsizing may present a great opportunity to cash in and ease the burden of loan repayments into retirement.
2. Lower your costs and your footprint
Downsizing to a smaller home typically leads to less property maintenance inside and out, reducing the costs to upkeep your home.
Think about your use of gas and electricity, a smaller home requires less to heat and cool. Even better a newer home might include more energy efficient options such as solar panels or an eco-friendly design.
Downsizing not only eases the pressure on your wallet but may also lower your carbon footprint.
3. Lifestyle suitability
Consider your lifestyle needs based on the space you live in and around. Is your floor plan suitable for the way you will be living as you get older? Do you live within a reasonable distance to your loved ones? Are you located near services you may require such as health care?
The older you get, the easier you should tailor your lifestyle to be. You may be in the perfect home now, but what about 10 years’ time. Future thinking is smart thinking.
4. Enjoy your retirement
That equity that you’ve worked so hard to create can open up more opportunities to make the most of your retirement. If your debt position is comfortable then why not think about using your equity to go on longer holidays or buy the car you’ve always wanted. A smaller home with less financial and maintenance demands can free up the time and money you need to do the things you always wished you had.
Alternatives to downsizing
It’s important to acknowledge that if your motive for downsizing is purely financial, then there may be other options if ideally you do not want to sell your home. A Mortgage Broker can point you in the right direction of a financial planner if you want to consider other ways to be financially stable by retirement.
Downsizing is a massive decision to contemplate with financial, emotional and physical impacts on your situation, but we are happy to chat it out with you if you need. Give us a call on 8300 8300 or simply contact us here.