Back in the day, a big house made sense with plenty of space out back for the kids to play in and lots of room inside for the family to spread out. But if the kids have now flown the nest, you may be starting to feel as though you’re rattling around a bit.
Marc Matthews from Marc Matthews and Associates in Umina Beach says, “Based on my 20 years of experience, downsizing the family home can be an extremely advantageous way of reducing time spent on upkeep whilst unlocking capital for retirement spending. This approach allows the individual to maintain their current lifestyle, social networks and independence. A solid and well thought out plan is a must in these circumstances and helps ensure that the process yields the desired result.”
The case for downsizing
- A big house can mean big bills. As well as the cleaning, gardening and general upkeep. Sometimes it can feel as though the house is getting on top of you, particularly if you’re on your own or you have health issues.
- Downsizing may also have an impact on your insurance arrangements, reducing your premiums as you reduce your belongings and the contents of your home. Also, if you haven’t finished paying off your mortgage, downsizing could also mean a lower mortgage payment, which could make a real difference to your cash flow – short-term and long-term.
- The idea of a tree change or a sea change can be very appealing. Imagine waking up to the smell of eucalyptus or sea breezes every morning.
If this sounds familiar, you’re not alone – many Australians who move house after their 50th birthday have purchased a smaller house. So selling the family home, freeing up some equity and downsizing to a smaller property could be an attractive option.
And the case against
- There are many memories associated with a family home – your kids may have grown up in your current house. Downsizing means you may need to sell or give away the belongings and collectibles you’ve amassed over a lifetime. Limited space in a smaller house will mean some things will have to go.
- There may be issues finding housing that suits older homeowners as Australian suburbs becoming increasingly dominated by large family homes.
- You may need to move to a different area to find and suitable home however, uprooting yourself may mean moving away from family, friends and support networks in your current local area.
- Tax and pension considerations can also greatly impact your overall long-term position. The family home can be a tax-effective way to pass wealth on to the next generation and also plays an important role in the age pension income and asset tests.
Whatever you decide, proper planning is key. Engaging with the right combination of financial and property professionals can make all the difference when considering downsizing your home. That’s why Country Wide Wealth has teamed up with Marc Matthews and Associates to bring you the very best in financial and property advice.
The advice contained in this article is general in nature and is not tailored to your specific needs or circumstances. Before taking action it is important you consult a financial adviser or other professional, we can help. Any figures and/or legislative references are current as of 15 August 2016.