Should I downsize to a smaller home?

Downsizing to a house smaller than your current home might seem strange after climbing the property ladder. Why build up to owning a decent sized home with ample space, only to then take a few steps backwards?

If your needs and priorities change, a smaller home may suit your new lifestyle. In some cases, it can also free up cash and save you money.  

There are many advantages to switching to a smaller house, yet it really depends on what stage of life you’re at and what you want from your home. 

If you own your property outright and have completely paid off the mortgage, you may be able to free up money through downsizing to comfortably enjoy your retirement. It’s one of the main reasons many people consider downsizing.

Say you live in a three-bedroom detached house in the city and your children have left home – you no longer need all the bedrooms. Selling this property and moving to a two-bed bungalow closer to family, could free up equity. 

For example:

• If you sell your home for £200,000 and buy a bungalow for £125,000
• This frees up £75,000 - assuming you've completely paid off your mortgage

You'll need to pay for general moving costs, stamp duty and solicitors fees, but the rest will be your money to use as you please. House prices can fluctuate over time, so impartial financial advice could be useful if you’re thinking of selling.

Further savings from downsizing

There are a few other ways downsizing could help you save money:

• Cheaper utility bills. Gas and electricity bills should be lower, as it costs less to heat and light a smaller home
• Reduced maintenance. A smaller home requires less work, from painting and decorating to fixing problems. You may also now have a smaller or no garden, freeing up more time and money as well
• Lower consumption. With less storage space, there's less chance of you buying clothes, equipment and other goods to fill it

There are many possibilities when it comes to downsizing. These are some of the main options for downsizing:

• Buying a smaller home. Simply moving to a smaller property, even in the same area, to free up equity or because you don’t need as much space
• Renting a new home. Selling up and renting once you’ve paid off your mortgage could free up a lot of money, depending on how much of your mortgage is paid off
• Switching to a flat. Downsizing from a house to a flat can save on heating bills and maintenance costs
• Being closer to family. If you’re thinking about moving nearer family this can be a common time to downsize. You’ll need less room for family to stay over anyway if you around the corner
• Moving into a bungalow. A bungalow can be easier to manage and get around with everything on one floor
• Heading to a new area. Moving to a new area is a common time to downsize, especially if property prices where you currently live are higher

Preparing to move home always requires some level of decluttering. When you’re getting ready to downsize it’s even more important, as you may not physically have enough room in your new home for everything in your current one.

There are a few things you can try to make decluttering a success:

• Measure your new home. Work out how much floor space you’ll have in your new home. Measure door frames and floor-to-ceiling to work out if anything’s too bulky or tall to move in
• Start decluttering as soon as possible. It can be a long task so tackling it once you know you’re moving is best
• Sort one room at a time. Begin with the biggest or most cluttered room and work your way down. This makes the task seem less daunting and ensures every square inch is covered
• Follow the one-year rule. Be brutal when deciding what to keep and throw out. Have you used each item in the last year? If not, you’re unlikely to use it in the next 12 months, so may be best getting rid of it
• Pass on items. Donate any unwanted belongings to charity shops, family or friends to reduce waste