As they reach their older years, many people consider downsize by moving into a smaller house. According to a Times article from October 2016, in Ireland, an estate agent has organised a seminar called ‘Planning for the Future, the Upside of Downsizing’, where people who have downsized share their experiences.
Many people downsize because a smaller house is cheaper to run. Another reason is to release money tied up in the large house.
David Bewley of Lisney estate agents, which is running the seminar, has explained the pros and cons of downsizing. Although his remarks were addressed to an Irish audience, they are equally applicable in Britain.
One issue he dealt with is when people want to complete the purchase of their new home, but have not yet sold their existing home. If there is still a mortgage on their existing homes, most lenders will not offer a second mortgage on the new property. The solution is to use a bridging loan to complete the purchase of the smaller home. If the existing home is mortgage free, then it can be rented short term and the income used for the mortgage repayments on the new house until a buyer for the existing house is found.
The main problem that can occur is if a buyer for the existing house is not found. Extending a bridging loan can be expensive and owners could be faced with maintenance costs of two houses.
The speakers at the seminar support the advantage of downsizing and the benefits of having the extra cash from downsizing.