Today’s article stems from a conversation our marketing team have been having surrounding people that downsize.
People downsize for all sorts of reasons. For some it is health-related, others struggle with stairs as they get older. Some find their homes simply too big as their kids leave the nest. In recent weeks I have met people who can’t manage the garden any longer, a lady who had lost her husband, a couple whose husband is terminally ill and a lady who is struggling with keeping up with the garden. I’ve also met a lovely couple who want to cruise more!
Lets start with some property facts. Over 8.1 million owner occupiers in England and Wales now own their homes outright. This constitutes 52% of owner occupiers, rising to over 90% of those aged 65 or more. Most downsizers tend to fall in the retired age group category, hence they have no mortgage.
A recent conversation though with a retired couple stopped us to think. A client asked, but what will I do with the equity? How can I make it work it for me?
Lets take my client. They want to down size from a 4 bed detached home that is worth in the region of £465,000. They have seen an apartment at The Residence which would in the region of £205,000. They could move here and enjoy more holidays, knowing the can lock it up and being an apartment it will be very secure. By the time they have paid the associated costs to move home, they will have approximately £250,000 in equity. What do they do with it?
- They could gift their children a deposit for a home. The above is a very generous example and is based on average UK house prices. Back in Lancaster, their daughter has seen a house at £150,000. Their gift at 20% would be £30,000. They would have plenty of money left over.
- They could invest in a buy-to-let property. The above example would actually buy them a very nice 2-bed apartment in Lancaster. They could still help their daughter. Or, the daughter could rent the apartment from them at a favourable rent!
- They could buy a holiday home! A 1 bed bolt hole in Cornwall would cost them around £195,000. But who says it has to be there? They tell me they have seen a very nice 1-bed apartment in Spain for 125,000 Euros!
Downsizing has many advantages. For many releases equity and start to then give financial freedom. It also means more practical things like a smaller house to clean, and easier garden to manage and lower energy bills!
Are you thinking of downsizing? If so, can we talk. At JDG we are always here to help. You can email me at michelle@jdg.co.uk or call us on 01524 843322
Thanks for reading
Michelle
