Is downsizing the right move for you?

Whether you are exhausted from maintaining a large family home, or just want to understand the things you need to consider before selling and buying a smaller home, this article is for you!

It’s a big decision but with enough research and planning, downsizing can be a liberating experience and have a positive impact on your lifestyle, finances and wellbeing. 

Downsizing your home has a number of clear benefits. A smaller property can be easier to manage and upkeep. It will also be less expensive which means you can sell your current home and still have some savings to take the holidays you’ve always wanted.

But how to know if downsizing is right for you? Here’s a list of a few things you need to consider before committing to the process:

Financial Considerations

Whilst purchasing a smaller home can be a great way to lower monthly expenses, it isn’t always the most economical option. For some people, affordability issues may mean that moving house may not be the best for you.

Data from the Australian Bureau of Statistics confirms that ‘one third of older low income households have less than $5000 in cash and other liquid assets, with nearly their entire wealth locked up in the family home.’

If this is the case, you may need to speak to a property and financial expert experienced in this area, who can guide you through the specific options available to you, whether that is selling your property to buy a less expensive one, building a granny flat or moving into a lifestyle or retirement village, ensuring your expenses don’t increase as this may affect your short term cash flow and financial options.

It may also be important to understand available mortgage options and specifically, familiarise yourself with reverse mortgages, their cost and payment involved and whether or not you qualify for one at your age. 

Granny flat living

A granny flat can certainly offer a lot of flexibility offering you the choice of staying in your home environment and enjoying a lifestyle with your family potentially on the same land.  It can also serve as a successful investment property if you would like to rent it to potential tenants, creating a stable source of income and adding value to your main property.  Or you may look to rent out your main house for greater income and live in your new designer granny flat.

Speaking to a granny flat provider can certainly help in understanding the implications, cost and process involved. A designer granny flat can take you to a whole new exciting living experience.

Apartment living

A flat or apartment can be a great option if all you want is a relatively small space to have your most precious possessions whilst living comfortably. 

Depending on where you choose to live, an apartment can certainly offer convenience of nearby transport, amenities and recreation.

One important aspect to consider is the cost of Body Corporate. Newer and larger residences with more complex community facilities would in most cases have quite a high monthly corporate cost, meaning your expenses may increase.

Before selling your family home, investigate how much will go into the purchase of an apartment as an asset, and how much would be left over to cover Body Corporate and daily expenses. In most cases, you should be fine as you will be saving on the tons of improvements and upkeeps or your older family home, but make sure you cover yourself with some calculations and forecasting. Seek advice from licenced specialists.

Retirement living

Living in a lifestyle or retirement village has plenty of benefits. If you are looking to mingle with people who, like you, have retired and want to enjoy life, a lifestyle or retirement village can offer a great community feel and even help you develop new and exciting friendships.  Community security cannot be ignored and villages can offer additional security and peace of mind.

Of course, choosing the right retirement village is key when downsizing. Choosing the wrong provider can be a costly error.

It’s quite common for people to fall in love with a village, sign a contract only to then regret it down the line when they realised the property arrangement is not as fair as they had first thought.

Before becoming emotionally attached to a retirement village, do your research. Speak to at least two to three people who already live at the village you are considering investing in, and don’t rely solely on staff and employees to tell you about all of the wonderful things they offer.

Contracts

Misleading marketing, complex legal clauses and extortionate costs can be hidden in the small print of a contract. Make sure you spend some time and get an independent lawyer or property expert who specialises in this area to help you understand the arrangement you’re entering into. This investment will pay off.  Be wary of taking advice from anyone who is getting a referral fee.

Make sure you protect yourself, get sound and unbiased advice to see if the options you are considering are right for you before deciding.

Your lovely possessions

Getting rid of your precious furniture or your years of keepsakes and memories can be a hard one for many who need to minimise their clutter to fit into a smaller space.

Marie Kondo, decluttering expert and bestselling author of The Life Changing Magic of Tidying Up, advises to not choose what you are discarding but rather what you are keeping. She mentions that keeping only those things that bring you joy is key in decluttering your home, whether you are downsizing or not. ‘If it doesn’t “spark joy” when an item is touched, thanked and ceremonially sent on its way towards a better life elsewhere’, continues Kondo.

If you would like the extra cash, Gumtree, eBay and Facebook offer easy ways to sell or buy used furniture, meaning you can have a little extra cash to buy the things you need.

Family

Downsizing is a family decision, and one that should be discussed with your spouse or partner, close friends and children. Make sure you bring everyone on your ‘journey’ of understanding the reasoning behind your decision but ensure you are in control of the final call.

Knowledge is power, so make sure you are supported by experts (lawyers, investment and property) who can give you unbiased advice. Stay away from any organisations that have referral fees and recommendation schemes. Even when on the surface it looks like they are providing great professional advice, they may not have your best interest at heart.

If you are looking to move away from your close family and friends, think of the impact this can have on your life versus your new living environment. If you prefer spending time with your grandchildren instead of living by the beach then making a decision on where to move should be obvious to you.

Change can be confronting and certainly stressful. Create a list of pros and cons and evaluate them individually as you weigh all of your options. Don’t rush into making a decision and certainly don’t make any decision under stress.

Downsizing can be a great choice but for it to be successful, you need to rely on thorough research, expert and unbiased advice so you can relax and enjoy this exciting new chapter in your life!

Happy downsizing!

About Kairos Group

We are an independent real estate specialist in the property market for over 50’s. We understand the emotional journey, the things that may cause anxiety while changing living arrangements. Our compassionate and professional team of property experts offer unbiased advice, can explain the different legislations, financial models, lifestyle and retirement options and their related cost structures, so you can choose what’s right for you.

For a free consultation, call us on 07 3012 6655 or make an appointment today to speak to us:

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