5 useful questions to consider if you’re planning to downsize

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There are many reasons why you might be thinking about downsizing. From needing less space now children have moved out to releasing equity to fund your retirement, setting out your needs can help you choose a property that’s right for you.

Here are five questions that can be useful to consider as you think about downsizing.

1. What space do you need?

Before you downsize, set out what space you need. It can help you narrow down the search when looking for a property that’s right for you.

As well as thinking about the practical space you need, like the number of bedrooms, it’s worth considering your lifestyle. If you work from home, do you need to have a separate office area? Or, if gardening is a hobby, what size space do you need to continue enjoying it?

2. What local amenities are important to you?

As well as the actual property, you should consider what local area will be suitable for you. You may want to stay close to your current home or be ready to move somewhere new.

Setting out what amenities are essential to you, such as good local transport connections or community groups you can be part of, is important for building a life in your new home.

3. What are your long-term plans?

It’s worth considering how long you plan to stay in your new home, as your needs may change in the future.

If you’re hoping to stay in the property throughout retirement, for example, would it be suitable if you lost mobility in your later years, or could you adapt it? It’s something that can be difficult to think about, but it can reduce stress and the need to move in the future. Setting out long-term needs can help you view properties that are right for you and your plans.

4. What are the associated costs of downsizing?

While you may downsize to reduce your costs or release equity, remember there are likely to be fees associated with moving.

You will need to consider how much legal fees, survey costs, and hiring a moving van will add up. Factoring these costs into your budget can help ensure you’re not hit with an unexpected bill.

If the property you’re buying is more than £250,000 in England or Northern Ireland (reducing to £125,000 in April 2025), you will also need to pay Stamp Duty. This is a tax you pay when purchasing property and land.

How much a Stamp Duty bill is will depend on the value of the property. You will need to pay Stamp Duty within 14 days of completion, so it’s important to include it in your budget.

Taxes when buying property in Scotland and Wales are different. You will need to pay Land and Buildings Transaction Tax in Scotland if the property is more than £145,000, or Land Transaction Tax in Wales if the property is more than £225,000.

5. Will downsizing help you reach your financial goals?

Downsizing can help you reach your financial goals. If this is one of the reasons why you’re thinking about moving, make sure it’s the right choice for you first.

Moving to a smaller property could help you pay off your mortgage or mean your repayments are lower. However, that’s not always the case.

There may be alternatives you want to explore too, especially if you would prefer to remain in your current home. That could include using your savings or other assets to support lifestyle goals.

In some cases, equity release, which can help you access wealth locked away in your property, could be a suitable alternative to downsizing. However, equity release isn’t right for everyone.

Often you won’t make any repayments and the interest is rolled up. Instead, it is paid when you pass away or move into long-term care. As a result, it can significantly affect what you leave behind for loved ones. That’s why you should carefully weigh up the pros and cons of equity release before you proceed.

Do you have questions about downsizing?

If you have questions about your downsizing options, including taking out the right mortgage for you, or whether equity release could be an appropriate alternative, please contact us.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Equity Release will reduce the value of your estate and can affect your eligibility for means-tested benefits.

We aim to keep our clients up to date on interesting and relevant financial news.

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