Friday, August 25, 2017

Life is, if nothing else, a series of contrasting phases.

It can also be argued that real estate follows a very similar pattern.

Typically, there are three major phases in house buying.

First time buyers are usually looking for a home that allows them to "get on the ladder" of home ownership. In general, this will be a smaller house than they will ultimately aspire to, for the obvious reason that finances can get very stretched at this stage.

The next common phase is when homeowners start a family. At this point the minimalist apartment you bought to get a foothold suddenly seems woefully small. Time to upsize!

And when offspring have flown comes the third, and arguably most problematic and very optional phase - downsizing.

Unlike the two earlier common stages of home ownership, downsizing is usually a somewhat more voluntary measure. And it can present a real dilemma for many.

One thing we should perhaps deal with straight away is that downsizing doesn't always mean downgrading. Many senior movers may want a smaller, easier to maintain, home, but will opt for something that possibly has a nicer specification and is better located than their current property. Indeed, according to a Nielsen study of a couple of years ago, 46% of people planning to move when they retire actually intend to increase the size of their home or spend more for a home the same size as what they have now.

For this group of older buyers, the decision is easier, in the sense that financial concerns may not be key driver. Other motivations for this group may include downsizing to help to facilitate a desire to pursue a range of interests, including travel and, maybe, an RV purchase.

It gets more complex, however, if downsizing is driven by a need to economize, for whatever reason (and this can of course happen a lot sooner than in the retirement years).

Here's where the need imposes itself on the homeowner, when perhaps the ideal situation would be to stay in a home that's much loved.

Naturally this can be a stressful decision. It's therefore imperative to seek sound financial advice at this point, to establish if there's a way to stay in the home and be able to manage the expenses associated with it.

One option open to homeowners aged 62 or older is to consider a reverse mortgage in order to access home equity and raise finances. These loan products are very complex and always require expert professional guidance from a trusted financial advisor, but they can potentially be the difference between keeping a home and having to downsize for some.

Clearly, the word "downsize" means different things to different people, and for a wide range of contrasting motivations.

If you're at a crossroads with your current home, why not contact us today and benefit from our extensive experience in finding the perfect solution tailored to our clients' individual circumstances.

Juan RomeroJuan Romero
Investing in your Future!