Property thoughts: Should you Right- Size?
Posted on: 09 September 2016 by Dennis Star
With pensions shrinking, interest rates falling and inflation rising, should you downsize in retirement? What if you have no choice but to sell up? the answers can be found within.
With interest rates at all-time lows, the state pension getting increasingly smaller and inflation rising at an alarming rate, should you consider down, or rather, right-sizing to free up money for retirement?
The current trend
Many over 50’s are currently opting to down, or rather, right-size. In a recent survey over 10,000 revealed that they would consider moving if they deemed the new house appropriate, with 7 out of 10 admitting they would like to ‘right size’ upon retirement.
With the children all grown up and making a life of their own elsewhere, there is little reason to keep ownership of the large family home, with electricity and gas bills much higher than they need be.
Indeed, selling off unneeded large property will allow anyone in later life to fund newer and smaller properties that can be easier to keep and give you more time for enoying retirement years. New build homes like those designed by Strata Homes make for ideal relocations.
And not only will down-sizing allow you to buy a more convenient property, but it can release money for long awaited investment projects such as becoming a landlord or investing in shares. Either that or you could use the new money for your children’s and grand-children’s future.
Bleak for some
For some selling up is less of a luxury, and more of a forced choice. In one study it was found that one-third of renters are now aged over 41, whilst that number was just one-fifth two years previous. Furthermore, 42% of retirees now renting are former home owners whose primary reason for selling up was to pay off existing debts (40% of those surveyed).
In addition to this, 19% sold up to cover the costs of a divorce with 9% selling up to boost their pension.
What to do in this case
If you are forced to sell and have no money to purchase another property,your options become limited, there are several schemes that look at helping people in this situation, but renting is often the option of choice. Spending the time to find a home you feel comfortable downsizing to is often the best solution. By planning early and having an ideal time in mind to move into a new home can save you stress and worry later down the line.
Other options include equity release on your current home, this can often release capital in the house to allow you to make the neccessary renovations, to enable you to continue to enjoy your home into later life. Whatever you decide make sure that the circumstances are right for you now and have in mind how they would develop in 20 to 30 years time.