Advantages and Disadvantages of Downsizing
Downsizing is a popular way of saving money and creating a much more convenient lifestyle. Once commonly associated with those of retirement age, downsizing is becoming increasingly popular with homeowners of all ages and backgrounds who wish to own a smaller home.
The decision to pack up and sell then move to a smaller home is a big decision to make, so it is wise to consider all of your options, as well as advantages, disadvantages and the financial cost of such a choice.
Below, we have compiled some advantages and disadvantages of downsizing your current home to a much smaller property, as well as useful tips to help you along your downsizing journey.
Reasons you may want to downsize
There are a number of reasons why people choose to downsize their home. This could be for financial reasons, or for health reasons, or something else. Below are some common reasons people choose to downsize.
You no longer need a bigger home
Your children have already flown the nest and have children for themselves, so you no longer need your home with multiple unused bedrooms. You’re often left with bedrooms you no longer need which need to be maintained at a financial and timely cost.
If you find yourself in financial difficulty, downsizing may be an option for you. Selling up and moving to a smaller, more suited home could reduce your monthly outgoings and any debt.
To release equity
You may have some equity tied up into your home which you wish to release. Selling your home for a cheaper and smaller house can help release your equity, therefore topping up your savings or retirement fund.
To change locations
You may be living in the bustling city and prefer the quieter life of the countryside, so selling up and downsizing to a much smaller home in a different location could be the change you need.
When is the best time to downsize?
Predicting changes in the property market can be difficult, as the stability of the market is constantly changing. It’s important to do your research and constantly monitor the market for any peaks and troughs in prices and stability.
It’s known that both summer and winter are bad times to sell property, due to families being away on holiday during the summer or busy with Christmas celebrations. Both spring and autumn are typically quiter months, so could be ideal times of the year for you to move.
Advantages to downsizing
Whatever your reason for wanting to downsize, there are several advantages to downsizing your home. Below are some of them.
Reduce financial strain
One of the most common reasons people downsize is to reduce financial strain. Downsizing your house can help save money, as well as get out of any debts you may have. Selling up and buying a much cheaper home could leave you with money left over to re-pay any debts or bills you may have.
Easier home to maintain
Living in a home that you have outgrown can not only be costly, but can also be inconvenient to maintain. Having unused bedrooms and rooms that once inhabited loved ones can be costly to maintain as you may have to pay for repairs or decorating throughout the years.
Decorating and maintaining repairs for a home that is too big for your needs also comes at a cost in time, as spending hours repairing or maintaining rooms that you don’t use eats away at your free time. Downsizing for older homeowners can also be a sensible option, as keeping on top of these repairs can become difficult as you get older.
Reduce monthly outgoings
You might be finding yourself paying out large amounts of money every month on council tax, gas, electricity and water bills, and by moving to a smaller home, this could significantly reduce your monthly outgoings.
Reduce health worries
For those homeowners who have health concerns and may find living in a larger home difficult due to flights of stairs and other issues, moving to a smaller, more compact home could help lessen those health worries. For those who find navigating stairs difficult, moving to a bungalow might be a suitable option, whereas those who require close companionship with freedom may want to consider a retirement village or sheltered accommodation.
Disadvantages to downsizing
As well as advantages to downsizing, there can be some disadvantages, which may or may not affect your decision on whether to move or not. Below are some potential disadvantages for downsizing.
Downsizing will mean you have less room for belongings and you may feel like you’re tripping over people’s toes. You can comprise when downsizing, and choose a home with less bedrooms and a smaller kitchen, but with bigger social areas such as the living room and dining room.
Moving to a smaller home can be a big step, financially and emotionally, but can also be a big change in your lifestyle. You may be used to living in a larger home, and moving to a smaller home can be a big change for some homeowners.
Less room for family and friends
Unfortunately the days of having family and friends stay over may be long gone if you choose to move to a much smaller home with fewer bedrooms. If having the grandchildren round to stay on weekends is something that is a regular occurence, you may factor this consideration into your decision.
As with most house moves, downsizing does come with costs. After paying for solicitor fees, estate agent fees and general moving fees, you may not be left with a lot of money left over, especially if you have debts which need to be paid off.
Is downsizing expensive?
As with all house sales, downsizing does come with costs attached. These costs can eat into your equity, savings or inheritance that you may wish to leave to your loved ones.
It’s difficult to estimate costs associated with downsizing as all homes are valued differently, but it’s important to factor in costs such as:
Estate agent and solicitor fees
One of your biggest expenses comes in the form of estate agency fees, which on average is around 1.8% plus VAT on the value of your house sale. This, coupled with solicitor fees, conveyancing fees and survey fees, can be anything from hundreds of pounds to thousands.
If you’re downsizing, you will typically have to pay stamp duty on your new property, which is applicable on houses over the value of £125,000. The rate of stamp duty currently stands at 2% of the property value, so for example, if you purchase a property with a value of £130,000, you will be expected to pay £2,600 in stamp duty.
Packing and moving fees
Another fee to pay would be any fees that are associated with packing and moving such as hiring a moving service, paying for any storage needed and also packing material costs.
If you have decided to downsize your home, it can be a stressful time with lots of issues to consider. We have compiled a checklist on everything to remember when moving to a smaller home.
- Prepare a to-do list – Keeping organised is key to moving home, so make a list of the advantages and disadvantages of downsizing, as well as noting down expected costs, or quotes of things to do before the move.
- Declutter, declutter – Make a start on decluttering your home and selling, disposing of or giving away any belongings you no longer need. Moving to a smaller home will result in less room for clutter. Consider selling any items that you do not need to raise extra money for the move, or donating to charity.
- Fresh lick of paint – Consider decorating your existing home if it needs a fresh lick of paint to help entice viewers. Moving can be a long process, so the quicker your existing home sells, the quicker you can move to your new home and start the next chapter of your life.
- Shop around – Make sure you shop around for your dream home. You may be lucky to find the perfect home on your first viewing, but make sure you check out other properties to see what else is available on the market.