Tips to make the most of downsizing

Tips to make the most of downsizing

If you’re struggling to justify “the empty nest” now that the kids have (finally) moved out, you may have considered downsizing. At least 1.6 million Australians feel the same way – up 30% from last year, new research shows.

Downsizing is looking for a smaller, more manageable place. With a smaller square metre count comes other decisions – do you want to make a seachange? Treechange? Or swap the suburbs for something swankier in the inner city? Though selling your old three-bedroom in the suburban fringes may fetch a great price, will it be enough for something more upmarket? Can you get finance as a pensioner or self-funded retiree?

Some of us want to downsize into something more accessible. As our mobility decreases, as much as we hate to admit it, climbing stairs just to get to bed becomes more and more of a pain.

No matter what you’re looking for, here are some tips to make the most of your downsizing – so you can have as a hassle-free experience as you can.

What’s your plan?

Like all things in life, we all have to make plans. Where do you want to live? How many bedrooms is best? Do you want to be closer to the family or somewhere with great amenities such as doctors, shopping, gyms, and cafes? Do you want to join a retirement community for companionship and some form of managed service? This all has to factor into what you intend your life to look like as a retiree.

Prepare for downsizing with decluttering

Your home has accumulated a lot of memories over the years – and a lot of junk. But, as the saying goes, one man’s trash is another man’s treasure. If something sitting in the back cupboard has more than a fine coating of dust on it, it’s probably best to give it away or sell it. You should also have an impartial friend help with getting rid of your junk – so you can keep on task and be free of sentiment.

You could even make a bit of money by selling some things on Gumtree or eBay – or hold a garage or yard sale.

Downsizing may mean upgrading – your finance options

If you’re looking at units, homes, and communities and balking at the prices of some of the properties on offer, you aren’t alone. It’s common to see that the sale of your home may not cover the purchase price of the smaller home in a more desirable location.

Savvy Managing Director Bill Tsouvalas says retirees that intend to buy a home with high equity and a shorter loan term should compare their available options and may be able to gain access to the funds they require. “As long as a retiree passes the eligibility criteria, has some kind of income, and is prepared to decrease the loan term, they can get approval for a home loan for a downsized property. You may need to commit to an exit strategy such as lump sum repayments or ongoing income from superannuation to ensure the loan repayments are fulfilled.”

Looking at government incentives

The Federal Government offers seniors incentives to assist with downsizing. The major incentive revolves around superannuation contributions. People aged 65 or over can make an after-tax contribution of up to $300,000 into their super from the proceeds of selling their home. The voluntary contribution and $1.6 million balance rules are waived. However, the house must have been your principal residence for at least 10 years.

Other states and territories also offer stamp duty waivers for seniors looking to downsize.

Always get impartial advice

Whether it comes to decluttering, finding a smaller place, or getting finance for your dream retirement home, you should always get impartial advice from accountants, lawyers, and home loan brokers. It can save you a lot of time and heartache.


This is a sponsored article produced in partnership with Savvy.

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