Most homeowner’s finances are tied up in their property, and the costs of owning a home can be unnecessarily high, especially for those with children who have grown up and fled the nest, people hitting retirement age or those who own a property in an area which has seen a housing boom in recent decades.
There is a rising trend which sees homeowners unlocking the financial potential of their properties and mortgages, either to save money or to free it up for other investments and lifestyle choices. People who reevaluate their priorities often find that opting for a smaller property, or one in a less expensive neighborhood benefits themselves and their families and allows them more freedom to maneuver in other areas of their lives.
Let’s look more closely at some of those potential benefits, all tied up in bricks and mortar.
Lower housing expenses
It seems obvious, but it is important to note that a smaller property will cost you less money to live in – for a number of reasons. If you are moving to a less expensive property you will save money on insurance, property taxes and mortgage payments (if you have remortgaged or taken a mortgage loan for your downsized house).
A property which is smaller in size, as well as price, will also mean that you save money on maintenance costs and decorating. Your bills will greatly reduce in size – one air conditioner unit compared to two or three, a smaller area to heat in winter, less electricity to use on vacuuming, less water for mopping – the list goes on.
If you employ a cleaner to keep your home spick and span you will cut down on the time they need, and therefore the amount you need to pay them. The same with gardeners – smaller garden, less work, less outlay for you. It all adds up!
Freed up funds
This is where downsizing comes into its own – you’ve unlocked money that was tied up in your unnecessarily big or expensive home. Now you have a significant amount of money to use to invest in, well, whatever you want!
But the smart money from downsizing goes into long term, secure investments and ways to benefit you and your family for the future. Pour it into your pension, or cram it into the kids’ college fund. After all, more and more people aren’t able to save enough money for later life simply by tucking away a bit of their income each month, and student debt can be crippling well after the ink has dried on the diploma.
If you already have debt which just won’t seem to go away, the money you save from downsizing your home can be used to tame or to settle it – and nothing beats the liberating feeling of being newly debt-free (believe me!).
Another way many downsizers use their freed up funds is to reinvest in property – perhaps to purchase a home for their children or to rent it out. And for those entering the real estate market, the options are plentiful in terms of lenders and brokers. There are many lending options out there and just as many tools that are accessible online to aid in the process, so researching and comparing home loans has, frankly, never been easier.
Declutter for cash
Ever take a look round your home and wonder how it got so full of stuff? All those impulse buys from your desk at work, they all seemed essential at the time… but now you never use that camera anymore, that pile of unread books you’ll never get around to, you can’t remember what those gadgets are even meant to do, ALL those clothes…
It’s a familiar scenario. The answer is simple – find a new home for all that clutter! Of course, you can donate things to goodwill, or use a service such as Freecycle. But, if you have your finances in mind you can sell stuff on eBay, social media or by having a good old fashioned yard sale.
Ultimately, downsizing can bring you huge financial benefits, so there is no need to see it as a backward step. Whether you use the money for security, investment, education or simply to pursue a leisurely retirement, it is a sure-fire option to unlock those finances you hadn’t considered before, as well as simplifying your life and making you prioritize the important things.