If you own your property outright and have completely paid off the mortgage, you may be able to free up money through downsizing to comfortably enjoy your retirement. It’s one of the main reasons many people consider downsizing.
Say you live in a three-bedroom detached house in the city and your children have left home – you no longer need all the bedrooms. Selling this property and moving to a two-bed bungalow closer to family, could free up equity.
For example:
- If you sell your home for £200,000 and buy a bungalow for £125,000
- This frees up £75,000 - assuming you've completely paid off your mortgage
You'll need to pay for general moving costs, stamp duty and solicitors fees, but the rest will be your money to use as you please. House prices can fluctuate over time, so impartial financial advice could be useful if you’re thinking of selling.
Further savings from downsizing
There are a few other ways downsizing could help you save money:
- Cheaper utility bills. Gas and electricity bills should be lower, as it costs less to heat and light a smaller home
- Reduced maintenance. A smaller home requires less work, from painting and decorating to fixing problems. You may also now have a smaller or no garden, freeing up more time and money as well
- Lower consumption. With less storage space, there's less chance of you buying clothes, equipment and other goods to fill it
