Downsizing to lower your bills, help your children or fund your retirement
The mortgage market is on the move again. Gross mortgage lending increased to £17.6bn in October 2013, an increase of 37% from £12.9bn in October 2012. This figure is the highest since October 2008, when it was £18.6bn.
Growth has been fuelled by a combination of increasing consumer confidence as the economy recovers slowly but steadily, and greater funding availability, due to the Government’s Funding for Lending programme, supplemented this year by its Help to Buy initiative.
First Time Buyers, looking to get their first foot on the housing ladder, and home movers, who at last can take the next step up, are generally considered to be the main drivers of the market. But a recent report by Lloyds Bank shows that downsizing – moving from a larger property to a smaller one – is an important reason for selling. Almost half (45%) of homeowners who are planning to sell their property in the next 3 years say they are doing so to downsize.
Their reasons for downsizing are as follows:
- reduce bills and other outgoings – 43%
- supplement retirement income – 37%
- re-invest the equity in an alternative investment (not property or pension) – 31%
- give money to their family/children – 18%
- invest in a pension – 12%
Those looking to retire are in the majority in the downsizing market but, as economic recovery is still slow, it is also being considered by younger consumers. 29% of those thinking about downsizing are doing so earlier than they expected to.
Asked about the type of property to which they intended to move, 31% of downsizers say they are looking to move to a detached house, 25% to a semi-detached house and 44% are looking to move to a bungalow.
The Lloyds report says that the amount that potentially can be raised by downsizing from a detached property to a bungalow has risen by 12% (or £10,221) over the past decade. Such a move today would receive an average of £97,722, compared with £87,501 in 2003.
What should you do?
Are you looking to retire and want to free up equity from your home by moving somewhere smaller? Or would you like to lower your bills or help out your children by releasing funds through downsizing?
Selling your home is not a decision to be taken lightly and you may be able to raise capital by releasing equity in your home without moving. It’s important to seek professional advice about whether downsizing is the right solution for you.
Contact us today to see how downsizing could help you.
Your home may be repossessed if you do not keep up repayments on your mortgage.