1. Less maintenance and upkeep
While larger properties offer more space, they also require more cleaning, gardening and upkeep. For some, the time and money involved can be better spent elsewhere.
This is especially applicable if the kids have left home and certain areas of the property are no longer being used. Imagine spending less time dusting, and more time catching up with friends, going to the movies or pursuing hobbies!
A smaller home means less work and more time on enjoyable activities.
2. Money for other things
There may be financial incentives to downsize. For one, it could allow you to live mortgage-free. If you have substantial equity in your current home, you may be able to pay off your next home outright.
In other instances, downsizing may mean a smaller mortgage, and as a result, reduced mortgage repayments. The potential savings could be used more cost effectively, like reducing personal debt (ie personal loans and credit cards) or even paying off your mortgage quicker. Imagine what you could do with an extra $500 a month. You could potentially knock over other debt or work towards other financial goals.
Another option may be to boost your retirement nest egg by making a contribution to your superfund from the sale proceeds of the downsize. From 1 July, 2018, the government introduced a new measure allowing people aged 65 or over to make a ‘downsizer’ contribution to super of up to $300,000 from the proceeds of the sale of their home ($300,000 each for couples). Be sure to speak to your accountant or financial planner about this option, or ask us for a referral. If you need help developing a plan to reach your financial goals, financial advice can really make a difference. A licensed financial adviser can help you identify realistic goals and put strategies in place to achieve them.
3. Lower ongoing costs
Downsizing may reduce the running costs of your home, like your utility bills and maintenance costs. It costs less to heat or cool a smaller property and generally there are fewer appliances. Again, this money could be used for other things like investing or improving your lifestyle.
Another important aspect of downsizing is that it’s better for the environment. Less running costs An added bonus is that reducing energy consumption is also better for the environment. If being green is important to you, downsizing may be the way to go. You may also find there’s less space for “stuff”, which forces you to declutter and cut down on other areas of consumption.
4. The ability to live in your dream location
Time for a sea change or a tree change? Perhaps you want to be smack bang in the heart of the action? Or maybe you’d like to live closer to family?
Downsizing to a smaller property could mean you can afford to relocate to the area you’ve always dreamed of living in.
As you can see, there are plenty of upsides to downsizing, including potentially reducing costs, saving time and improving quality of life. However, there may be other financial implications for seniors (downsizing may affect the amount of social security benefits you receive). Speak to a financial advisor before choosing whether it’s right for you.
If you do decide downsizing is the fresh start your family needs, please get in touch. We can help you find the right finance for your specific needs.