Has your 4-bed St Albans family home become too much? Here are some tips for property downsizing...

Is it time to think about a smaller place?

Is it time to think about a smaller place? - Credit: Archant

Whether you’re an empty nester or looking to free up equity, thousands of homeowners will be looking to downsize this year. In fact, a recent study has shown that one in three homeowners aged over 55 are considering downsizing right now.

Living in a large family home with a big garden is the dream when raising children, but naturally it won’t suit everyone’s needs as you get older. Here’s what you need to know about downsizing in today’s market from Sally Noakes, National Partner within Strutt & Parker’s Harpenden office, one of the UK’s leading independent property partnerships:

1. Get the numbers right

‘How much is your property worth and how much do you want to spend on your next home? Do your research using property search sites and get at least three agent valuations on your current property to make sure you sell at a price that you’re comfortable with. The highest valuation isn’t always the right one.

‘Remember to factor in the additional costs — tax, legal and estate agency fees — as well as a contingency spend to ensure there are no financial surprises. This may be one of your largest financial decisions of your life, but remember to look forward to the potential savings it can bring too, including reduced living expenses and more financial freedom.’

2. It is OK to be emotional

‘Selling the family home where the walls echo with the sound of children playing and memories of family meals around the table will inevitably be tough. We all know houses are more than just bricks and mortar - hence our British obsession with them - so saying goodbye can bring a huge sense of loss. Keep in mind the practical trade-offs and try to look forward to a new exciting chapter in your life. It is well documented that successful downsizers feel liberated from the tyranny of household chores, upkeep, big heating bills and large gardens.’

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3. If downsizing doesn’t work, try ‘my-sizing’

‘On the tails of traditional downsizers is a new trend in ‘my-sizers’; those moving to a house of similar value but driven instead by a change in location, land, size or style of home. Often referred to as right-sizing, this won’t be the usual move to a smaller house with less land. This is a common move for those in an ‘in-between’ life stage where some of the older kids have left home, and perhaps there has been a job change. They are not ready to give up the four bedrooms for the children quite yet, but no longer have a need to be close to the top school.’

4. Consider re-mortgaging

‘Some downsizers use the opportunity to lower their mortgage payments on their new home by putting down a bigger deposit. Seek professional advice from a broker to ensure you get the most competitive rates - many can find the cost associated with the process outweighs their potential saving. Be aware that lenders require a far more detailed breakdown of an applicant’s spending habits than ever before, from grocery bills to care home fees. Make sure you are in the best position possible before you apply.’

5. Where to invest your equity

‘When you downsize you’ll be likley to end up with a large cash sum. Leaving it in the bank isnt going to generate much return as interest rates are still at an all-time low. Other options might include investing in the stock market, corporate bonds, equity income funds, cash ISAs or a stocks and shares ISA.

‘Some investments have a minimum financial commitment, so knowing what you can afford is a good starting point. Further property investment through buy-to-let, looking at short term yield return and longer term capital growth through re-sale, is popular. Ultimately, it is best to take professional advice on how to get a proper return that is right for you. A good financial advisor will come into their own, so let them guide you through this process.’