Last-time buyers are those people looking for the home they will settle in during their retirement, and which they will potentially live out the rest of their lives in. They account for 30% of homeowners aged 65 and over.

Unfortunately, research from Key Retirement has shown that many last-time buyers are struggling to find a home which matches their needs and is located in their preferred area.

Why do older people want to downsize?

There are several factors which may lead retirees to look for a smaller, or more manageable property to enjoy the rest of their life in, including:

  • Maintenance: 53% of over-65 homeowners struggle to keep up with the physical demands of repairs and DIY projects in their current home. 27% cannot afford to outsource these jobs to others.
  • Finances: 42% of homeowners over the age of 65 are worried about the cost of bills and repairs on their current property.
  • Physical size: Almost a fifth (17%) feel that their house is simply too big for their needs.

The problem with downsizing

There are two main issues facing those looking to move into a smaller property during retirement; finding a home in the local area and making a decision which will benefit them financially.

620,000 retired homeowners can’t find a property which both suits their requirements and is in a desirable area. Meanwhile, 500,000 will not be any better off, financially, after making the move to a smaller home. (Source: Key Retirement)

Why releasing money matters

Dean Mirfin, Chief Product Officer at Key Retirement explains: “Downsizing should make financial sense for older homeowners as it releases money to pay for retirement and it also should make sense for the property market as a whole as it frees up bigger houses.

“But despite the numbers of older homeowners wanting to downsize it is clear they face problems in finding suitable homes for retirement and for many the finances just don’t add up. Unfortunately, that leaves them struggling to maintain homes, and in many cases, struggling financially.

“Pensioners are sitting on property wealth of more than £1 trillion which could significantly improve their standard of living in retirement and helping them make the best use of that money would boost their finances and the economy as a whole.”

What are the options?

If you are a last-time buyer, or someone who is simply looking to downsize your home as part of the next phase of your life, you will need to consider all the options facing you. These include:

  1. Selling your current home and using all the money to buy a new home: You might be tempted to assume that downsizing will see your next home be much cheaper than your current property. However, smaller homes are not always cheaper, and you may find that you need all the proceeds from the sale of your current home, to buy the next.
  2. Buy a cheaper property: This will allow you to retain some of the money from the sale to support your retirement and boost your financial stability.
  3. Rent, rather than buying again: You may wish to retain all proceeds from the sale of your current home and choose to rent your next home. Of course, figures have recently shown that month-to-month, renting is more expensive than making mortgage repayments (source: Santander).

But, if renting is the logical next step for you, we’re happy to help you to plan around that.

Making sense of downsizing financially

With all major decisions in life, we recommend talking to your financial adviser or planner before making any commitments. By talking to us, you can gain a better perspective on your financial situation and benefit from a more rounded view of the options available, alongside the potential consequences they may bring with them.

To discuss your later life living situation in more detail, and to bring financial context to your decisions, please get in touch with Sarah or Bev on 0115 933 8433.