Are you thinking about moving home in the next few years? If so, what's your reason for taking the plunge? While it may be assumed that the majority will want to take the next step up the ladder, research from Lloyds Bank has revealed that this isn't actually the case, with the largest proportion of potential home-movers actually wanting to downsize instead.
The figures show that nearly half (46%) of those thinking of moving home in the next three years plan to downsize, with this being the single most popular reason for moving. The popularity of downsizing has soared in recent years, no doubt driven by the expectant returns on offer: the figures show that detached homeowners who downsized to a semi-detached property could secure an average windfall of £117,230, a fantastic cash boost by anyone's standards.
As such, almost three-quarters (72%) of downsizers expect to profit from the move, with 35% planning to reinvest the additional capital in a new property and 29% planning to invest in other financial products, while 21% would use the money to invest in a pension or pass it on to family. Many of the reasons for downsizing were financially based, too, with 31% wanting to free up extra cash for retirement and 39% hoping to reduce bills or free up equity, while 53% wanted to move somewhere better suited to their circumstances.
Mike Songer, mortgage director at Lloyds Bank, commented on the findings: "People may consider moving home for a variety of reasons, often tied to their next big step in life – whether that's getting married, starting a family or children growing up and flying the nest.
"We typically think of people moving to bigger houses as they move up the housing ladder, but people are increasingly looking to downsize their home because their circumstances or priorities have changed. While financial gain may not be the main driver for those looking to trade down their property it is clearly a factor, with three-quarters of downsizers expecting to profit from such a move.
"There are definitely financial benefits to be gained from trading down, with an average potential windfall of £117,230 when moving from a detached home to a semi-detached house. Downsizing is also healthy for the market, as it helps keep it moving and frees up larger properties that could be perfect for young families about to take their next step up the property ladder."
As an added bonus, many people could find that downsizing will help them become mortgage-free – or at the very least, would mean they can dramatically move down the loan-to-value (LTV) scale. A smaller mortgage generally equals a lower rate, so compare the options and see how much lower your repayments could be.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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