Downsizing to a smaller home can be a good opportunity for those looking to save money, and enjoy the equity freed up from the sale of their home. Here, we look at the pros and cons of downsizing your home, and the different downsizing options available.
Moving into a smaller space can make a lot of sense for many people. Downsizing your home often means you’ll save money, experience less stress and reduce your carbon footprint.
But downsizing isn’t without its cons. It’s a lot of work to move into any new home, especially when it’s somewhere a lot smaller. And, not to mention, downsizing your home doesn’t always save you as much money as you might think.
To help you understand the pros and cons of downsizing your home and whether this might be a good option for you, we’ve compiled a list for why you should and should not downsize your home.
In short, downsizing is the process of moving into a smaller property. People consider downsizing their home for a range of different reasons – it could be to boost their finances, reduce their expenses, minimise the upkeep of their home, or move into a more suitable home or location.
While many people often strive to upsize their homes, in order to have more space for a growing family, downsizing in later life can offer so many options.
Making the decision to downsize isn’t easy – you’ve created so many fond memories in your family home and are used to having more space. But there are a number of distinct benefits that make downsizing your home worthwhile in many circumstances.
It is quite common for people to move home in later life – they might want to live somewhere different or closer to their family. Or, perhaps a recent change in circumstance, such as a health issue or bereavement, has caused them to reconsider their living arrangements.
Whatever the reason, there’s a whole range of pros associated with downsizing – aside from saving money. Here are some obvious – and not so obvious – benefits of downsizing your home.
Theoretically, smaller homes cost less than larger ones. So, if you have a large amount of equity in your current property, you may walk away with enough money from the sale to pay cash in full for a smaller home.
This means you’ll have lower closing costs as you won’t need a mortgage, which brings with it origination and lender fees. In addition, it’s worth noting that you’ll close faster without a mortgage, and you won’t have to deal with all the paperwork that comes with it. And, of course, once you’re in your new home, you won’t have a monthly mortgage payment.
But it’s not guaranteed that you’ll have enough money to pay for a smaller home in full after downsizing. Smaller homes can cost just as much as larger ones depending on where they’re located and the demand.
Downsizing to a smaller home means you’ll have less to clean and maintain – that means more time for you. And, you might even choose to downsize into an apartment or flat, in which case, your landlord or property management company will likely take care of the communal areas and any repairs you might otherwise have to do yourself.
Downsizing can often alleviate some of the stresses that come with living in a larger home. Theoretically, you should have a smaller (or no) mortgage payment and lower utility bills, you should have more money in your pocket each month.
Thus, other financial stressors, such as how you’re going to pay your council tax or afford to have lunch out with a friend, should be less concerning. And, you’ll have more time to relax and unwind since you don’t have to spend your entire weekend cleaning the house.
When you move into a smaller house, you’ll likely save money on your usual monthly cost – on everything from your mortgage payment to your monthly utility bills. Those extra savings could be used to fund your retirement, take a well-earned holiday, or go for more dinners out. Downsizing to a smaller house might free up enough money in your budget to lead a fuller life.
The larger the home, the more resources it uses. This means that living in a larger house will likely make your carbon footprint bigger. So, moving into a smaller house could help reduce your carbon footprint – instead of heating and powering rooms that you don’t use, you’ll only be paying for a space that fits your needs.
This also means you’ll save money on your utility bills in a smaller house, which may allow you to invest in better insulation, better windows and other energy efficient appliances.
Depending on where you live now and where you’re planning on moving to, downsizing presents a great opportunity to enjoy a different lifestyle. For example, you could downsize from a large country property to a cosy flat in the centre of a city. Your lifestyle change doesn’t have to be that drastic, though. Whatever changes you choose to make, downsizing to a smaller home allows you to explore a new way of living.
While downsizing can be a great option for many homeowners, it might not be the right one for you at this very moment. To determine whether it would work for you, it’s important to properly weigh up both the pros and cons of downsizing your home.
While many assume that downsizing to a smaller home will save them lots of money, it can actually be the opposite. For starters, you’ll have to pay for everything from boxes and removals to estate agent fees for the move. Then, you might even have storage fees to pay if you can’t move into your new home straight away.
Any move is a lot of work, but especially when you’re moving to a smaller house. When you’re downsizing, you have the additional task of discarding possessions you won’t fit in your new property. To do so, you might have to organise a garage sale, sell items online, donate some to charity or give them away to loved ones. This can be overwhelming on top of all the other home-moving tasks you have to contend with.
Unless you live on your own, downsizing to a smaller house means you’ll have to get used to sharing your space more. This can be a particular challenge for large families that are used to retreating to their own corners of the house. Siblings might have to share bedrooms, and the family might have to crowd around one TV.
Moving to a smaller house means less space for storing all your belongings. Christmas decorations, towels and bed sheets, old photo albums, out-of-season clothes. When you downsize, you might be surprised at how much stuff you actually have stored away.
It’s only when you no longer have the space that you see what you really need to try and get rid of. While you can store things in boxes under the bed or in the loft, if you have one, you might regret giving up all that storage space you had before.
Alongside all the pros of downsizing to a smaller home, there are a number of reasons why you might initially consider moving, such as:
These are just a few of the reasons why someone might think about downsizing to a smaller property, but there are many more. Whatever your reason for considering a downsize, you need to ensure you do your own thorough research and consider all the pros and cons of downsizing before making a concrete decision.
Whether you’re a homeowner, a private tenant or living in council or housing association accommodation, there are a number of different downsizing options:
Many downsizers choose to remain on the property ladder as owning your own home brings a sense of security. But, obviously, buying a house is a long-term commitment, so if there are any uncertainties it might be better to rent in the area first.
Renting has the advantage of enabling you to get a feel for a place or a different size or style of home before making any long-term commitments. New rental agreements tend to be fixed for an initial term of six or 12 months. After this, you may choose whether you want to stay or leave the rented accommodation.
Retirement villages are popular downsizing options for older people. These purpose-built property developments are aimed at the elderly, who want to enjoy an independent lifestyle in a safe environment.
If you live in council or housing association accommodation, there may be a number of schemes available to help you downsize. Cash incentives are sometimes offered by councils and housing associations to encourage tenants to downsize to smaller homes in order to free up the larger properties for families.
That is the question! Ultimately, when deciding whether downsizing your home is the right option for you, it’s essential that you properly weigh up all the pros and cons. You need to ask yourself some important questions, such as: