Four steps to take before downsizing your home

Leaving the home you have lived in for years, often decades, the one that you always thought would
be your “forever home” can be tricky financially and emotionally. Consequently, the decision to
downsize requires careful consideration, research and planning to make sure you get it right. Understanding the motivations behind downsizing is paramount. People choose to downsize for various reasons: seeking a change of scenery, desiring a low-maintenance home in their current community, aiming for closer proximity to loved ones, or craving increased social connections.

Financial factors also play a significant role in the decision. Downsizing can enable you to pay off
debt, unlock equity for investment, reduce home maintenance expenses, and lower property costs
such as taxes and utilities, providing more financial freedom to pursue your passions.

Location

Selecting the right location is crucial. The surroundings can significantly impact on your lifestyle, so
it’s essential to consider proximity to amenities, friends, family, and recreational activities. If your
new home is intended to be your forever home then assessing it with a view to your future care
needs and ensuring safety and accessibility features are important considerations for long-term
comfort and well-being.

Lifestyle

Contemplating how time will be spent in the new space is equally important. Beyond simply dwelling
on physical attributes, you should envision how you will spend your days and foster meaningful
connections in your new home.

Legal

Understanding the legal aspects of downsizing is vital. Whether you are contemplating a freehold or
strata title arrangement, a leasehold agreement in a retirement community, or a granny flat
arrangement, understanding the terms of your contract, including rights, responsibilities, and
associated costs, is essential to make an informed decision.

Finances

The financial implications of downsizing extend beyond the initial purchase price. Additional expenses such as exit fees, potential sharing in capital gains or losses, renovation costs, and various fees must be factored into the equation. It’s crucial to crunch the numbers and evaluate the broader financial implications like how much money you will have to invest or spend, the impact on your eligibility for pension and other government benefits, your cash flow, and long-term care considerations to name a few.

Decisions surrounding downsizing are multifaceted, encompassing not only contractual obligations
and financial considerations but also personal preferences, lifestyle aspirations, and the desire for
meaningful connections in the next chapter of your life. Making informed choices ensures that
downsizing truly enhances your quality of life and helps you avoid nasty surprises down the track. If you are at the point of considering a downsize, getting impartial, professional advice can help you fully understand the whole picture. We help people going through this every day and would love to guide you through the process. You can contact us here.

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