What is home downsizing?
If you’re interested in downsizing your house, but not quite sure how to go about it, you’ve come to the right place! Read on to learn more about what it means to downsize your home.
Home downsizing involves moving to a smaller house (physical downsizing) or buying a house that costs less (financial downsizing). When homeowners downsize, they typically put their homes up for sale and purchase a new home to move into. There are plenty of reasons why people are opting to move houses and figuring out if it’s the right choice for you can be difficult.
If you’re interested in downsizing your house, but not quite sure how to go about it, you’ve come to the right place! Read on to learn more about what it means to downsize your home.
Why do people downsize their homes?
A change in lifestyle or financial standing are common reasons most homeowners downsize. If your home doesn't match your current and future needs, downsizing may be a good solution to your problem.
Retirees or empty nesters, for example, generally opt for physical downsizing. They would likely want to go from multi-bedroom houses to properties with fewer bedrooms or yard space so that it’s easier to manage now that they’ve reached retirement age or have fewer people living with them.
Others may also consider financial downsizing because they want to live in an area with a lower cost of living or live in a similar home that’s more cost-effective.
Benefits of downsizing your home
Downsizing also comes with a few advantages which are:
You’ll get a home that fits your lifestyle
As we grow older, our wants and needs change. What may have been our dream home five or ten years ago, may not meet our needs today. Downsizing allows you to move into a home that’s better suited to your lifestyle. It’s also a great opportunity to find a better neighbourhood that can cater to your needs.
Less maintenance and upkeep
Moving into a smaller home makes maintenance and upkeep tasks more manageable. You don’t have to worry about empty bedrooms gathering dust and taking up too much space. If you move into a newly built home, you might see fewer repairs overall since there’s less wear and tear.
Save money on insurance and utilities
Smaller homes often have lower insurance premiums which could save you hundreds annually. You may also see lower council rates, taxes, and mortgage payments. However, this depends on where you live and the financing you acquire. You will also likely save on utilities when you downsize to a smaller home.
Things to keep in mind when downsizing your home
There’s more to downsizing a home than simply moving to another house. You need to put a lot of thought into it to ensure a successful home downsizing. Here’s what you need to consider:
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Your current and future needs. Moving homes is a long and complicated process. Before downsizing, make sure that it’s the right decision. Think about your immediate needs and your long-term needs and what type of home would suit you best.
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The additional costs. Aside from the purchase of a new home, you also have to consider moving costs, loan fees, closing costs, and more. Take note of the hidden fees so you won’t be surprised when the bills come.
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Alternatives to downsizing. Keep your options open before going ahead and downsizing your home. Instead of outright selling the property you may want to rent it out instead or convert it to a dual occupancy.
How to finance your home downsize
If you own your current home outright, you could use the funds from the sale to purchase your new property. However, if it’s not enough, you can take out a home loan and use the proceeds from the sale as a downpayment.
A bridging loan may be a good fit for those who still have a mortgage on their current property. With a bridging loan, you can purchase your new home while you wait on the sale of your current one. You don’t have to waste time and downsize as soon as you can.
Whatever type of loan you choose, loans.com.au can help you find a great deal on your home finance. Get in touch with our lending specialists for more information or apply online today!
Find out in under 2 minutes if you qualify for one of our low rate home loans.
About the article
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.
