Thinking about retiring? If so, this could be a great time to downsize your property. Selling the family home can be an emotional time, but it can also lead to less stress and comfortable living later in life.
As you pay off your home loan, you build equity in your property, which is as good as money in the bank – and in some cases, even better. This means that once you’ve owned a property for a few years, it’s easier to move to a new place. However, there are several things you’ll need to understand when making the decision to downsize and retire.
Is downsizing right for me?
There are lots of advantages to downsizing. One of the biggest is money. Most people who downsize buy a smaller or cheaper home, allowing you to liquidate some equity from the house you are selling. This can then lead to investing in other properties you can rent out for an income stream.
Plus, mortgage payments and utilities are often cheaper. Another plus is that your home will fit your current lifestyle. The way you want to live in retirement may not be the same as it was when you were younger, so downsizing to fit your new needs will make you happier in the long run.
Downsizing may not be for you if you’re not sure what your life will look like during retirement, or if you’re happy with your current housing situation.
If your golden years are soon approaching, make sure you choose the right home for your needs. Don’t rush – the house you choose now is likely the one you will spend the rest of your time in.
Think about the neighborhood you want to live in. For example, you may want to live close to family, or near shops and businesses that you like to visit. Think about if the house will adapt with your age. Will small corridors and stairs be a hindrance in the future?
Apartment living is also becoming more and more popular for Australians for several reasons. There is little to no maintenance on the property, security is tight, and you are closer to the metropolitan life.
Know your Goals
Will selling your current home and buying a new one pay off financially in the way you’d like it to? Keep an eye on the market so that you’re clear on what you’ll be getting. And before you buy – or even start looking – write down your goals for this new home. How big do you want it to be? What’s your price range? Do you want to live somewhere quieter, busier, or something in between? Know what you’re willing to compromise on.
How will you finance your new house?
Do you want to tap into your existing equity, or refinance your current loan? Speak to your financial advisor, accountant, and real estate agent to decide what will be more beneficial for you. Think about whether you want to buy or sell first. Many experts suggest selling first, so that you don’t have to rush to sell your house.
Think about the future
The Australian institute of Family Studies found that the main reason for retirement was poor health or the health of a loved one. This means that access to health care is crucial when you are at the age of retirement. Consider your medical needs when it comes to choosing the right home for you. Making sure your home is close to your preferred medical center and that your home is equipped for accessibility.