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How to 'downsize' and release cash from your home

Journalist: Imogen Tew, Freelance

ended 11. December 2023

Hi all,

I'm writing a story for The Telegraph on downsizing and am looking for some experts to help with some tips surrounding the process.

The story is aimed at those in their 50s and 60s who are looking to move from a family home to small cottage/flat, releasing cash in the process either to gift to their kids or to fund their retirements.

My questions are:

  • What should those looking to downsize look for in their new property and new location?
  • Are there any pitfalls of downsizing to be wary of?
  • What are the pros of downsizing?
  • If you have any anecdotes about what clients/customers have done with the money or their downsizing process that you can share, that would be greatly appreciated! The more detail the better

Thank you so much in advance

Imogen

11 responses from the Newspage community

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Michelle Lawson
Director at Lawson Financial
Downsizing is common among 'empty nesters' however children are staying at home longer due to the cost or buying and renting. I have seen people downsize to clear their mortgage and reduce their outgoings and also those that have then gifted some of their equity to the children to help them to buy. Requirements will depend on what the individuals require and they should take advice on taxation for gifting monies.
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Rita Kohli
Managing Director at The Mortgage Stop
Downsizing for those in their 50s and 60s should be approached with a strategic focus on future needs. Key factors include selecting a property with ease of access, lower maintenance, and good proximity to essential services. Financially, the process involves understanding immediate and longer-term costs, alongside the benefits of releasing equity. This equity can significantly bolster retirement funds or assist family members. It's crucial to acknowledge the emotional aspect of leaving a family home to plan for a smoother transition. Downsizing often leads to a more manageable and cost-effective lifestyle, allowing for a focus on hobbies and community involvement. It’s important to take a longer-term approach making sure you factor in future funds requirements for unexpected events as you don’t know what is around the corner.
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Riz Malik
Independent Financial Adviser at R3 Wealth
In the process of downsizing, it's essential to prioritise your fundamental requirements, including proximity to amenities and transportation links, without making significant compromises. Moving to a smaller home or a different area doesn't necessarily mean sacrificing your quality of life. It's beneficial to create a list of your top priorities and keep these in mind while exploring potential new homes. This approach ensures that your key needs are met in your new home.
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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
Where we've seen clients do this, they tend to be looking for a property that is "future-proofed" and somewhere they feel they could stay until later life. This generally means, smaller in size, more manageable garden, less rooms to maintain, and perhaps also considering having a downstairs toilet/bathroom too.

The cash released can be used to help supplement retirement income, or gift to children/grandchildren.

We've actually helped some clients downsize, pay off their existing mortgage, buy a new house outright and retire at 50 years old. This was through looking at the various options they had and them feeling it was more important to them to retire earlier and have a "lower value" house, than stay where they were.

There are stamp duty considerations as well as agent fees, moving costs etc to factor in but if the numbers work it can be a great trade-off.
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Simon Bridgland
Director at Charwin Private Clients
Keep in mind, is it cost, maintenance or simply that you want something smaller and perhaps easier to look after?
Practical reasons for downsizing are always greater in number than emotional reasons for staying, but emotions are usually stronger, so many simply stay put and look at alternatives, I have seen many regret the move, especially if its for financial reasons which often mean a move out of area.
Low to zero maintenance is a must, with easy access to the building and garden areas. Being physically near shops for food etc, you cannot rely on public transport not changing or removing routes if shops are away from your home.
Good insulation with cheaper utilities or easier maintenance are all no-brainers when it comes to new home benefits, but if needed, downsizing allows you to keep equity in your hands for whatever purpose is a great way to access it, but it's still not free. Moving costs mount up easily, estate agents, 2 lots of solicitors fees plus the likely stamp duty bill.
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Mike Staton
Director at Staton Mortgages
Today, more than ever, there is no better mortgage than a mortgage that doesn't exist. If you find yourself in a home that you consider too large and you are still paying a mortgage, downsize. Bite the bullet and get rid of the mortgage in preparation for your retirement, alternatively, you can be the richest person in the graveyard if that empty 3rd and 4th bedroom is so important to you.

Whilst we have seen a big push on getting first time buyers on the ladder in recent years from the government, nothing is ever mentioned about people coming to retirement age, why not offer some form of government benefit to incentivize these people who have worked hard all of their life to live in the home of their dreams where they have raised their family. Hold on, I forgot that we live in the UK and don't help those who have helped themselves.
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Darryl Dhoffer
Founder at The Mortgage Geezer
For a couple in later years downsizing and moving away, need to consider very carefully the new property and location - lifestyle considerations, access to amenities, community feel and location and proximity to family are all areas to consider. Pitfalls to be wary of include emotional attachment to existing property, underestimating the costs of downsizing, and the extraction from close friends and family. A few pros of downsizing include potential financial freedom, reduced maintenance and upkeep costs, and improved quality of life. A good example of a downsize I have experienced, was when a couple downsized to a retirement community, enjoying the social activities, amenities, and security of a supportive living environment.
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Rowan Frayling
Managing Director at J Finance
What should those looking to downsize look for in their new property and new location?
I see one or two scenarios here, one where it needs to be small enough to cope with in older age, but also another where it still needs to be big enough to have current or future family come round for short or longer term stays! I have seen people downsize only to realise an expanding family of grandchildren no longer fit!
Are there any pitfalls of downsizing to be wary of?
The costs, estate agent fees, solicitor fees, stamp duty, surveying fees - often equity release as an alternative can be considered.
What are the pros of downsizing?
Not having to release equity which may further erode the equity in the family home.

(Happy to comment further!)
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Gary Bush
Financial Adviser at MortgageShop.com
In our opinion downsizing, at the right age, should be encouraged by the government - with maybe incentives for elderly homeowners. There are far too many large (4/5 bed) properties across the UK with one or two occupiers, which isn't great for the housing shortage scenario. A downsized property under these circumstances needs to have good public transport links, a range of supermarkets and shops, a post office, and community activities to take part in. The only pitfall that is evident in households downsizing is the inability to have your children return home say after a relationship breakdown or suffering from financial differences - this could also, by some, be seen as another benefit however. The pros to downsizing are numerous from the obvious less expensive household bills, utilities, council tax, insurance, etc - to the lessening of property maintenance bills. Obviously downsizing in later life to a ground-floor single-level property can really benefit in avoiding fall risks.
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Sharon Hewitt
Managing Director Chiltern Relocation at Chiltern Relocation

Connectivity of location is vitally important as people age. Look at being on bus/train routes. Easy access to shops, doctors, and hospitals. Geographically closer to relatives, preparing for a time when you will require more interaction with them in the future.

The pitfalls are, so many of my clients want to reduce the size of the accommodation and garden but still want to be on a good road for social standing. In general, there are few single-story houses/bungalows around, so inevitably, adjustments will be required regarding locations. It is quite a jump from a house to a flat, but it ticks many downsizing boxes due to being close to towns, bus routes, and doctors.

The pros my clients have found is the relief of the annual house and garden maintenance. Reducing their overheads with heating, etc. Also, you feel lighter once you clear out a lifetime of clutter.
Our downsized clients spent more time travelling the world and enjoying the freedom of extra money and lower overheads.
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Austyn Johnson
Founder at Mortgages For Actors
Get tax advice. Stop everything and talk to someone who can tell you how much you will lose to the different taxes along the way. Downsizing only works if you can actually afford it.