"Unrealistic" homeowners rush to downsize | moneyfacts.co.uk

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Published: 10/08/2017
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Your home is your biggest asset, so it's little wonder that so many people want to use that asset to their advantage in later life. Being able to unlock some of the cash tied up in your home can go a long way to boosting your retirement income, and many are opting to do that by downsizing – yet according to research, they could be unrealistic in their expectations.

Downsizing rush

Research from Key Partnership shows that estate agents have reported a surge in enquiries from customers looking to downsize, yet many overestimate how much money they could make from such a sale, and are struggling to find homes to move into.

According to the survey, 44% of estate agents have seen a rise in enquiries from older homeowners looking to downsize in the past year, yet 68% said that would-be downsizers have unrealistic expectations about how much they could raise.

Furthermore, 56% said there's a shortage of suitable homes on the market for downsizers, and 68% warn that there aren't enough properties available for those who are less mobile, which could make downsizing in later life even more difficult. This could be compounded by the slowdown in the housing market, particularly among home-movers, with data from UK Finance showing that home-mover numbers have been slowly falling in recent months.

"When downsizing works it can be an ideal solution for older homeowners but sellers need to be realistic about how much they are going to make and it appears many are struggling to find suitable homes," said Will Hale, director at Key Partnerships.

"The shortage of homes for sale is pushing up prices for downsizers who may struggle to raise the sort of money they are expecting to help with retirement planning while also having to go through the upheaval of moving home."

Equity release – the alternative to downsizing?

Given the difficulties in finding suitable homes to move into, it's perhaps little wonder that 16% of would-be downsizers have given up or failed to find a new house in the past two years – and many are looking to equity release instead.

Indeed, some 44% of estate agents said they regularly suggest equity release as an alternative way to raise money, with such plans allowing older homeowners to release some of the cash tied up in their homes while being able to stay put.

"Equity release should be part of all conversations with older homeowners considering downsizing, when for many it simply doesn't add up," said Will. It could prove to be a viable solution, but it of course won't be for everyone – getting the right advice is essential, so why not contact our no obligation equity release advice service to see if it could be worth considering.


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