It helps to offset any sadness about leaving with excitement about your new home and the happy times to come. Like any big decision getting your downsizing decision right is going to take some research.
The property we’re in can often feel like our “forever home”,so making the call to downsize can feel like a big decision.Simon Letch
Know your why.Understanding why you want to downsize is a crucial first step.
Knowing what you want to leave behind,what you want to keep and what you want to change helps you understand the driving force behind your decision. You may want a different lifestyle and seek a “sea change” or “tree change”,or you may simply want a low-maintenance home in your current community.
There can be financial motivations too:paying off debt,freeing up equity and reducing property related costs. The combined outcome can mean more time and money to spend doing the things you love.
Determine what you can afford.Moving costs money. While that may seem obvious,many people simply compare the price they are selling their existing home for with the price of their new one,but this is a recipe for disaster – because the cost of moving can easily run to tens of thousands.
Take into account the spaces you’ll need – a second bedroom if one person snores,a room for visitors,an outdoor space to enjoy your morning coffee.
You need to break it down into selling,moving,and buying costs,this will make sure you are not left short when it comes to how much will be available to spend or invest.
Work out where.Where you live affects how you live,and it’s something you can’t change without moving again. So,think about the people and places you want to be close to (or far away from).
Whether it’s family,friends,the beach or a favourite club,identifying the people and places that you want to be close to can help you narrow down your “where”.
Consider the accommodation itself,taking into account the spaces you’ll need – a second bedroom if one person snores,a room for visitors,an outdoor space to enjoy your morning coffee – think about how you will live in the space.
While you may be fighting fit,it’s wise to contemplate your future needs,especially if your plan is to stay in your new home long term. Ask yourself what would happen if you needed care.
Modern homes,including granny flats and those within retirement communities,are often designed with future care in mind. Look at your new home for potential challenges,such as narrow halls and doorways and cramped bathrooms.
Few people plan to spend their days watching television,but if you don’t plan anything else that’s what you can find yourself doing. So when you’re thinking about where to downsize to ask yourself how you will spend your time. If you are thinking about moving into a retirement community there is normally an events calendar – grab a copy and circle the activities that interest you.
Downsizing Made Simple (2nd Edition) by Rachel Lane and Noel Whittaker,available now.Supplied
Understand what you are signing.Whether your new home is a freehold,strata title,leasehold,licence,or a granny flat arrangement – you will need to sign a contract. Your contract spells out your rights,responsibilities,and costs. Your job is to ensure that you understand it and that it has a fair balance of these three elements.
Of all the downsizing options granny flat arrangements can be particularly complex as they involve family,are not necessarily on commercial terms,and if it goes wrong the whole family can be affected.
Crunch the numbers.While the purchase price of your new home is obvious there’s much more to consider.
In freehold or strata properties,you may need to factor in stamp duty,owners corporation fees,and the potential for special levies. While granny flat arrangements are typically with family,that doesn’t mean they are free.
In retirement communities,there is the weekly or monthly fee that you pay to live in the village and often there can be an exit fee. Your exit fee will typically include a Deferred Management Fee (DMF) as a percentage of either your purchase price or future sale price and there can be shared capital gains or losses with the village operator,along with renovation costs,marketing and selling fees.
Breaking down the cost into the ingoing,ongoing and outgoing will help you see what you will pay upfront,while you live there and when you leave and make comparing different options easier.
Armed with the knowledge of what your new home is going to cost you can get a clearer view of the bigger financial picture. How much money you will have to invest or spend,how much age pension (and other benefits) you can receive,your cash flow,and your longer term financial position should the need for aged care arise.
The where and why of your downsizing decisions are just as important as the contract you sign and the associated costs. Ultimately,getting good “bang for your buck” from your downsizing decision often comes down to how you invest your time and who you spend it with.
This is an edited extract from Downsizing Made Simple (2nd Edition) by Rachel Lane and Noel Whittaker,available now. If you would like to attend the book launch you can register through the where you can also find a range of useful exercises,checklists and calculators to help you on your downsizing journey.
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