There are many reasons why you may need to downsize your home. Maybe because your present house is too big for you to maintain, or maybe you think that it would be a good idea to sell your big house and buy a smaller home and invest the money or use it for something else. The downsizing process however, can be quite hard as you may have a lot of memories and emotional attachment with the house, though it may be beneficial to you for a number of reasons. Before taking this life-changing step, you must be aware of the pros and cons of downsizing. Read on to find out some things you should consider:
You have money to invest
Downsizing your house leads to you having more money to invest. For example, if you sell your house for $500,000 and buy a smaller house for $200,000, then you are left with $300,000 which a decent amount of money to invest and get a good return. You could also buy two cheap houses, live in one of the houses and rent the other house. You would also benefit from appreciation of property over the years. In this way, you would have a nice income for the rest of your life, which is one of the great advantages of downsizing.
Lower monthly expenses
When you buy a house smaller in size, your monthly expenses would also go down. Insurance, mortgage payments and property taxes would be much less on a cheaper house. You’d also be also be saving on maintenance and utilities bills. This money can help in fulfilling dreams which you might have not have been able to fulfill, or go on that cruise holiday, due to financial constraints.
A bigger house means you have to spend a lot of time cleaning and maintaining the house, draining your energy, time and resources. When you downsize to a smaller house which has fewer rooms, the time taken to clean and maintain the house is much reduced and you have more time to spend on your hobbies.
Reduced utility bills
Smaller houses cost much less to heat and cool than a larger one. There are less nooks and crannies through which heat escapes, thus smaller houses have less heat loss and energy bills are low. Also there are fewer rooms to be heated, which is the main factor in lower energy bills.
You consume less
You stop buying things which are not necessary, as you just don’t have a place to put them!
You have less stress
Increased income, good investments, less responsibility, more free time – all these factors reduce stress and lets you enjoy a better quality of life.
Some disadvantages of downsizing are:
Disposing of memorabilia
You would have collected many things over the years which would have a lot of meaning for you. When you downsize and move to a smaller home, one of the things which is tough is disposing many things, such as furniture, kitchen supplies, books and cds, and many other things which you may be emotionally attached to.
Can’t host many people
You can’t have huge dinners in a smaller house and sometimes, out of town guests may have to stay in inns or hotels nearby.
Some owners of smaller homes feel cramped as there is less space, especially if the house has more than two family members.
People who have lived in a bigger house for a long time are affected by the lifestyle change which downsizing may bring about, especially those who dislike change.
What is right time to downsize?
If you decide to downsize, do it at a time when the market is in your favor, so that you’ll earn the most profit. If you downsize in a seller’s market, you would be getting more cash on hand after selling. Ideally, you should sell in a seller’s market and buy your smaller house / apartment in a buyer’s market.
Downsizing may have more pros than cons and you have to decide whether you want a bigger house with less saving or a smaller house with more money in your pocket.