Could Downsizing Boost Your Finances?
A new report has highlighted the financial benefits that are available to homeowners who consider downsizing. There are a number of reasons why this becomes an option for property owners, including old age, financial circumstances and personal reasons. Once they’ve moved, the additional money can be used for a range of purposes.
The research from Lloyds Bank shows that on average a homeowner would make £121,686 by moving to a smaller semi-detached property or around £103,715 if they downsize to a bungalow. Over half of those surveyed who were planning on moving over the coming three years were looking to downsize. Those who have done so in the last year have released almost 10% more than those who moved into smaller properties in 2004.
Reasons for Downsizing
There are generally strong financial or personal reasons why homeowners consider transferring to a smaller home. 63% of homeowners wanted to move to help with their circumstances, whether this is due to children leaving home or no longer being able to keep up with the maintenance. When it comes to saving money with the move, 40% are looking to reduce their household outgoings and 28% are interested in releasing equity. A quarter of homeowners looking to downsize want to use the funds for their retirement.
Putting the Money to Good Use
According to this research, 75% of those doing so expect to generate a profit. The money that they release during the move can be used for a number of different things. 43% of people wanted to put it into their new home. This could be by moving to a more expensive area or using it to carry out renovations, such as paying steel fabricators to create a stunning balcony or investing in a feature kitchen. Other uses for the money included putting it into a financial product (26%) or using it for their pension or to help a member of their family (13%).
The property market always needs a proportion of downsizers to keep everything moving smoothly. Those moving from larger properties into something smaller enable others further down to move up the ladder.
If you are considering downsizing your property, then there are many ways in which you can make use of the money. However, it’s important to do your research thoroughly and choose the right investment for your circumstances. Otherwise you could end up making bad choices and losing money.