As more Australians than ever before are living longer, the concept of downsizing is one which has never been so prominent. Over the years, family homes have become much bigger meaning as age sets in, a large home with the attached maintenance may no longer suit. Here are the key considerations to keep in mind when starting your downsizing journey.
Understand WHY You Want to Downsize
The motivations for downsizing are varied. Is it a sea change? A smaller home? Closer to family?
Financial considerations play a pivotal role in this decision. Downsizing can be a strategy to settle debts, release equity, reduce maintenance costs or save on rates and bills. Beyond financial benefits, it can also open up time for finally following your passions and hobbies. By understanding the why, this can help you plan to achieve your new goals.
Choosing Your New Home
Selecting the right living environment significantly influences your future lifestyle. Ideally you want to get this right the first time. Consider factors such as proximity to loved ones, social opportunities, local services and even potential guests. Parking or even walking distance to supermarkets if that is important to you. When exploring potential homes, consider your daily routine in each place. Retirement communities and granny flats often incorporate great designs, ensuring adaptability to potential care needs. Be wary of spaces with limitations, such as small bathrooms or narrow doorways, to ensure your new home can age with you.
Of course the up-front costs play a big part in this, however you also need to consider ongoing expenses. For retirement villages, consider exit fees. Strata properties may involve costs such as stamp duty and owners’ association fees.
Granny flat arrangements, usually involving family, introduce their own set of financial complexities. From upfront costs to expenses during the stay and upon exit, understanding these fully is imperative.
It is strongly recommended to get professional financial advice before you downsize. Having a trusted expert explain all the ins and outs can make a big difference to your financial situation. Understanding pension implications, your superannuation and more. A good financial planner will walk you through all your options, step by step so you can walk away with everything you need to know to make an informed choice.
If you would like help on starting your downsizing journey, you can contact us here.