Here are The Top 10 Things you should know before Downsizing.
1. Smaller house = Smaller Mortgage
Generally a smaller home can translate into a smaller monthly mortgage payment. When you’ve lived in your large family home for many years and built up sizeable home equity, you may be able to cash out and purchase a new smaller, less-expensive home — even possibly eliminating a mortgage payment entirely.
2. Reduced monthly expenses
Downsizing your home also downsizes your monthly costs. Utility bills may shrink, taxes and insurance may be reduced, and general upkeep and maintenance should be more affordable.
3. Shed the burden of home upkeep
Moving to a smaller, more affordable home or condo also provides a fantastic opportunity to ditch the snow shovel and slap on some sunscreen. If you take the opportunity to move somewhere with year-round sunshine, your days of raising a family in the cold winter could become a distant memory. If you choose to stay put in a climate with four seasons, moving to a townhouse can mean no more mowing if your community looks after the landscaping and shovelling. If you buy a condo, that could all be taken care of for you. All you need to worry about is locking the door when you leave to go on vacation!
4. Have a plan and get some help
Think about what kind of lifestyle you want. Do you prefer an urban setting? Or do you need a yard and love a suburban setting? Do you want to be part of a community that offers lots of activities and amenities in the suburban area where you have always lived? Or are you a more independent type who seeks out new adventures in a brand new neighbourhood where you can meet new people in a condominium building?
If you feel stuck, a home downsizing consultant can help you formulate a plan of action, appraise and sell belongings, and estimate how much money you stand to save.
5. More Affordable Area
Downsizing is a great opportunity to move to a less expensive place to live. Finding an area that gives you more “bang for your buck” is a big boon to empty nesters and retirees who will need to adjust to life on a fixed income.
Living in a condo for example, the average sale price is much lower than moving to a townhouse in the same part of the city.
6. Lifestyle upgrade
Empty nesters usually have a bit more time for themselves. In the process of downsizing, you have the opportunity to relocate closer to all the new lifestyle amenities you’ll want to enjoy. Is it golf, tennis, biking, and other outdoor activities?
Or do you prefer life in the city, with restaurants, theatre, shopping, and cultural activities all within walking distance? Downsizing allows you to live closer to the lifestyle you want — and hopefully, you’ll have a bit of monthly cash left over to enjoy it!
7. Less stuff = More Life
There’s something intangible about downsizing and getting rid of all that “stuff.” As you simplify your home, you simplify your life. Invest the time needed to clean out and edit your possessions, and you’ll create a lifestyle that functions better and is easier to maintain. Talk about a win-win!
8. A Case for Renting
Renting is a great option if you are concerned about carrying debt and a mortgage. It gives you flexibility and allows you to invest in other instruments, without investing solely in one single real estate asset. Another plus is that you avoid land transfer taxes.
From a lifestyle perspective, you may want to avoid being tied down to one area. You may wish to rent all over the world and live a travelling lifestyle. Or you might want to travel and visit your children if they live elsewhere without being tied to one big asset at home.
9. A Case for Buying
Buying a condo or a smaller home can be a wise financial decision. You may be of the mindset that you want to remain a property owner, and want to see your asset grow in the hot real estate market. You also avoid paying capital gains taxes on the sale of your principal residence.
The thinking here is that you cannot tolerate the idea of wasting money on rent, without any future gain. One thing to note is that if you move to a condo, there are monthly condo fees, property tax and extras such as hydro, and more.
10. Learning to Live With Less
Downsizing your home means a change in lifestyle and attitude. You may have to learn to live without a garage, that extra bathroom, and the basement storage where you tossed year's’ worth of home goods, equipment and mementos. A smaller home can mean less room for guests and less opportunity for privacy.
As you consider downsizing, ask yourself these questions:
- Do you feel ready to live more simply?
- When is the best time to sell or buy
- How many of the things you’ve accumulated over the years do you truly treasure?
- Should I rent or buy, condo or smaller home?
- What is a good condo building?
- Should I live in the same neighbourhood or not?
- How much does it cost to live in a condo?
- What is the value of my current property?
- How do we prepare to sell our property?
- How do we put together a transition action plan?
- How do we adjust to less space?
Home downsizing is really about making do with less. But some people would say that less is more. Rather than devoting your time and energy to supporting and maintaining your home, you may find yourself devoting more of your time and energy to enjoying it.