Downsizing is a popular choice for retirees but there are multiple factors to consider if you are planning to move when you retire.
Obviously, this will depend on your personal circumstances but there is always more to moving when you retire than you think. We’d like to share what we have learned having helped so many of our clients move house after retirement.
Although many retirees will move to similar sized properties – perhaps in the countryside or by the coast – most will downsize. There are several very attractive benefits to downsizing:
1. You’ll Save Money
If you can use the equity you’ve built up in your home, you will save yourself from having to keep making mortgage payments. However, moving to a smaller property should also save on taxes, insurance and utility and maintenance costs.
2. There will be less upkeep
The last thing you want later in life is having to feel you have walls to paint, lawns to cut and large gardens to tend to. You could even choose a community where all the gardening and maintenance is provided (albeit for a fee).
3. You’ll finally have a chance to declutter
Moving to somewhere with less room for storage forces us to get rid of what we no longer need but never got round to sorting out. This can be an emotional process, but it tends to be a cathartic one, especially as you don’t want to move into your new home only to lose the limited space you do have to things you don’t need, use or want.
You can also use this process to do some good by donating furniture, clothing and appliances to charities who will pass your donations onto people who really need them.
4. You Can Strengthen Family Ties
Downsizing often provides an opportunity to move closer to family in other areas that otherwise you wouldn’t be able to afford. Having the added security of family nearby can be hugely comforting, particularly if you are on your own or need help managing your money or health.
5. You can enjoy a better quality of life
Moving to a quieter or coastal location or to somewhere that gives you instant access to all the things you love to do. This should all be factored in while you decide where you want to move to.
6. You can improve your home’s accessibility
For health reasons you may want to lose the stairs and live on one level or be able to walk straight into the heart of your home as soon as you enter. Downsizing provides an opportunity to find a more accessible home that will suit you as you grow older.
However, there are also disadvantages to downsizing.
7. You’ll will have less space
It sounds obvious but some homeowners can feel a little cramped during the first weeks after moving to a smaller home. While you’re weighing up the various options, think about the space you definitely do need. Will you need entertaining space? A guest bedroom? Outdoor space?
8. Buying and selling a home is expensive
Even though you are moving to a smaller property, you will still incur all the usual moving expenses including repairs and redecorating to maximise the selling price, your agent’s fees, any inspections or assessments and, of course, lawyers (sorry!).
You may also be liable for Capital Gains Tax although this is rare as you will most probably be moving from your current primary residence to your next.
9. There may be additional fees to pay
If you move to any type of retirement community, you will probably need to pay regular fees to cover the upkeep and maintenance of the grounds and other shared areas and the staff onsite. These types of properties also charge a fee for when the property is sold, which is something to consider should the need arise to sell the property in the future.
10. There will be a period of adjustment
Even though you will be moving to what and where suits you best, you may find you are some way from friends and family. Although you can stay in touch and visit as regularly as is practical, there will be a period of adjustment as you make new friends and settle into your new neighbourhood.
11. You may not be able to take your pets
If you have pets to take with you, you will need to check your property has the space they need. Many communities also have no pet rules or restrictions on the type and/or size of pet you can have so you need to check these too.
If you have decided that moving is the best when option when you retire, we’d suggest you go through the following checklist:
1. What type of property do you want?
Will you have enough space? Will you have room to entertain or put visitors up? Do you want outdoor space? Would you like one or two floors? What accessibility requirements do you need to satisfy (maybe not now but in the future)?
The answers to these questions will confirm the type of property that is best for you.
2. Future costs and budgets
When you retire you no longer have a regular income so you need to be very careful to work out the budget you have to cover your ongoing costs of living including mortgage payments, utility bills, energy bills, council tax and community fees.
3. Work out your ‘cost of selling’
What fees will you need to pay and how much are these fees? How much will the removal company cost? What will you need to do to your home to maximise the price and how much will this cost? Will you need new furniture? Will you need to pay someone to take the large items of furniture you no longer need?
4. Get a realistic valuation
Many people think their home is worth more than it is. Once you have an idea of the probably costs of moving, ask three or four estate agents to value your home so you know exactly what to expect in terms of your sale price.
It is also worthwhile pressing these agents on the likelihood of achieving the asking price and to give you an idea of how long they think it’ll take to sell your home.
5. What are your mortgage requirements?
Although it is likely the equity released in your sale will cover the cost of your new smaller property, you may need some sort of mortgage. If you do, you need to be aware that some lenders have age restrictions. This makes it harder to get a mortgage when you retire. However, you may be able to transfer your existing mortgage if you have one or secure a mortgage for an additional fee.
6. Location, location, location!
Make sure you are absolutely sure you have picked the right location as this is likely to be the last move you make. Being close to family and friends is important, as is the need to satisfy the quality of life you want but it is also worth considering proximity to local amenities like shops, doctors and hospitals.
You should also explore local crime rates to make sure you will be safe and secure in your new home.
If you are planning to move home in the future and would like to find out how our hugely experienced property team makes moving as easy as possible, please email me at Jeremy.Tulloch@collinshoy.com or call me on 0208 515 6600.