Q. My Husband and I have both just retired and are now starting to seriously consider downsizing our property. With our children all gone we really no longer have need for this large 4 bedroom house and are now also thinking that releasing some equity could provide us an extremely comfortable retirement. Do you think it’s a good idea for us to consider selling up and downsizing or should we stay put to allow further capital appreciation?
A. A large property is an extremely valuable asset, and now you no longer require the living space downsizing to a smaller property could be a shrewd way to release equity and put some extra cash in the bank for a more enjoyable retirement. Property price increases over the years mean that when many home owners come to the end of their mortgage terms they are sitting on nothing short of a goldmine. In areas such as London and the south east where rises have been highest, the attraction to cash in and move to a smaller property either in the same area or further afield can be tempting, especially when like you the children have moved out and the extra space is surplus. Downsizing is increasingly a lifestyle choice that offers financial freedom. In fact, downsizers are driving the housing market in many areas of the country. There are many advantages. A lump sum of money released around retirement age can also assist with helping your children with deposits for their own homes, or if traveling is your thing then the world becomes your oyster with a healthy bank balance. Downsizing is one of the most common reasons for people wanting to move and should not be viewed as a negative thing in any way. Far from it, a property and location offering a new and inspiring way of life could be the best move you’ve ever made. Many downsizers leave large cities for a change of pace in the countryside, with Londoners particularly leading the way. As trends suggest, with a house full of equity and a life without the burden of a mortgage, homeowners are finding that there are many opportunities just waiting to happen, something financial freedom allows for those that are shrewd enough to realise. Of course if you keep your home the capital will continue to appreciate over the years but doesn’t it make more sense to enjoy the fruit of your labour? Ultimately you will still retain a healthy little next egg in the new property but also benefit from the pot of gold currently sitting doing nothing.