The pros and cons of downsizing.
Let’s face it, there’s many reasons why you might be thinking about downsizing. An empty nest, your financial situation or long held sea-change or tree-change dreams are just a few. But no matter the reason, it’s an important decision with lots of things to consider before taking the plunge (or not).
In the context of home ownership, downsizing is a term used for people looking to sell the home they currently live in and buy a different one. This is generally for physical or financial reasons. Sometimes both. Rightsizing refers to being more thoughtful and insightful about what you want in a home, and choosing the right place to suit your needs, lifestyle and home.
Financial downsizing – is selling your current home for a cheaper one, which may or may not be physically smaller. In fact, sometimes the opposite is true. For example, you own a small apartment in an expensive area of a major city. You want to sell up and move to a larger home in a coastal town where prices are more affordable.
Swapping inner city traffic for the ocean is the dream of many!
Physical downsizing – is selling your current home and moving into a small one. This is common among those with a large family home and, now the kids have all flown the nest, don’t want the maintenance and upkeep headaches of a big house and yard.
If your receive any type of government benefits, it’s a good idea to check how selling your home will affect them before deciding. With downsizing most commonly associated with older Australians, the Super Guide has some excellent information about buying or selling the family home and the Age Pension. Always talk to your financial team before making any permanent decisions.
Easier to maintain – maintaining a large home and yard is one of the main reasons people choose to downsize. A big home with empty bedrooms and a backyard that’s rarely used soon becomes a tiresome chore to maintain.
Declutter – if you’re moving from four bedrooms to two, you’ve got no option than to declutter, which is usually a good thing. You may even find things you can’t remember owning. Downsizing is a great time to get rid of all that stuff – donate to local charities, sell it online through a site like Gumtree or speak with your children who might love some of those cherished items too.
No more debt – if you don’t own your home, downsizing may change that. There may even be some extra money for a cheeky holiday or new furniture for your new home.
Extra cash – if you make a sizeable amount from the sale of your home, there’s lots of things you can do with it. You may be able to retire sooner, give some money to the kids or, depending on your personal circumstances, put some money into your superannuation. Or you could take the lot and book first class, around-the-world plane tickets and travel the world in style!
Reduced costs – When you move into a smaller home, your costs will reduce. Maybe you no longer have to pay someone to mow the lawns or maintain the gardens. Lighting, heating or cooling your home will be less with less space to heat or cool down. And then there’s all the dollars you could be saving on your home and contents insurance.
Less space – when you’re rattling around a big, empty family home, the reality of having to make tough choices when it comes to what to take with you can feel surprisingly difficult. Less space also means less stuff. As Marie Kondo says “Keep only those things that speak to your heart. Then take the plunge and discard all the rest”. It can feel liberating once you’ve started to take stock of your possessions, and stopped them possessing you.
Moving costs – it’s important to consider moving costs, as these can sometimes creep up on you. Choosing a reputable removalist can take the hassle out of moving – some even have packing services to really save you energy. Consider the relevant real estate and government fees as well. Speak with your selected professionals about associated costs, time frames and any other unknown elements like ‘staging a home for sale’. Avoid putting a dent in your hip pocket by asking ahead of time.
A new neighbourhood – it can be difficult leaving a neighbourhood you’ve been part of for many years. All the memories, the friends and just the familiarity of belonging to a community can be painful to leave behind. You may also be close to amenities such as supermarkets, shops, doctors and hospitals that will take on increasing importance as you age. But new friends and memories are just waiting for you to make them happen.
Whether it’s the low maintenance living or the promise of a wonderful lifestyle you’ve worked all these years to turn into reality, there’s no denying the attraction of a lifestyle village. You have the freedom to be as social as you want and join in, or opt out of, social events and activities.
And while you’re enjoying the fruit of your labours, making new friends or just kicking back and relaxing as you re-read all your favourite books (and discover some new ones), MHIA are here to make sure your insurance is a stress-free as your new life.
MHIA has 30 years’ experience (we may be older than your kids!) providing the best land lease insurance in the country. So if you’re thinking about downsizing, give us a call and we’ll chat about what this means for your home and contents insurance.