Is Downsizing the Right Move for Your Family?
For years, home ownership has been the goal for many Australians, representing the single biggest financial investment most of us will make. Pursuing the great Australian dream has been a rite of passage for young families looking to establish their own home.
In recent years however, home affordability has deteriorated, making it harder for young families to realise their dream of home ownership. A combination of high prices, restrictive lending and low wage growth has made it nearly impossible for families to get a start in the market.
For those families who have been able to purchase property, the burden of working long hours to meet mortgage repayments has taken its toll. For many, the great Australian dream hasn’t delivered the dream life they desire.
This reality has led to a growing number of younger families choosing to downsize their property, to relieve some of the financial pressure. Reducing their mortgage frees them to do other things, such as work less hours, head off travelling or enjoy more family time together.
Downsizing has many advantages, but is it the right move for your family? We’ve examined the benefits of downsizing, plus the considerations you should keep in mind, to help you determine whether downsizing your property is right for you.
The Advantages of Downsizing
Relieves financial pressure – selling your home or investment property for a more affordable option gives you the financial freedom to travel, reduce your work hours, study, pay off debt and live a more balanced and enjoyable life.
Saves time on maintenance – downsizing to a smaller property reduces the time and effort you spend on cleaning and maintenance, freeing you up to enjoy the many options your newfound financial freedom has given you.
Simplifies your life – moving to a smaller property forces you to re-evaluate your possessions as you face the reality of downsizing. This also helps simplify your life and identify what really matters to you as a family.
Reduces living expenses – downsizing to a smaller property not only reduces your mortgage, it can also reduce your overall living expenses. For instance, a smaller property usually incurs lower energy costs and council rates.
As you can see, there are many financial and lifestyle benefits to downsizing. However, there are also other considerations you should take into account, to ensure downsizing is the right move for you.
Things to Consider When Contemplating Downsizing
Reality of downsized living – can your family deal with the reality of a smaller house? Will your kids be able to share bedrooms? Will you be able to live without a second living area? You will need to be ready to deal with the reality of living smaller and potentially letting go of treasured possessions.
The costs of downsizing – selling and buying property attract significant costs, including agency fees, stamp duty, moving costs and conveyancing expenses. You need to be sure the savings you’ll make from maintaining a smaller property will offset the costs you’ll incur during the downsizing process.
Emotional toll of moving – downsizing can be a surprisingly emotional process, especially if you’re supporting younger children through the move. It’s challenging to deal with less space in a new home and your family may feel vulnerable and unsettled for some time after the move.
State of the property market – can you get a good sales price for your current property? Are there suitable properties available for purchase? Downsizing will only work for you if the market can deliver buyers for your property and provide viable alternatives for your new, smaller home.
The decision to downsize your property is a complex one, reliant on many factors. In the end, you and your family are the only ones who can make that decision. Just ensure you make an informed one, taking into account the benefits and risks that are part and parcel of downsizing your property.
Interested in discovering whether downsizing is the right move for your family? Vision Property & Finance has the knowledge and experience to guide property owners and investors in making the right decision. Call 02 8354 3000 to contact our Sydney office or 02 4014 1999 to talk to someone in our Newcastle office. You can also contact us here.
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