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Can downsizing your house free up extra cash?
February 22, 2013
For many retired Australians, finances are tight. However, there is potential to improve your circumstances by downsizing your home. The Real Estate Institute of Victoria (REIV) has recently released data which reveals the amount of equity that could be unlocked through downsizing by retiree-aged home owners. As a retiree, through downsizing you could increase your income and remain in the same area you are living in. So why not consider a move?
Downsizing can unlock equity
For many retirees, it is possible to take advantage of the 25 or 30 years spent paying off your home loan simply by downsizing. The REIV research provides you with the tools to weigh up the options. Further, by downsizing not only can you unlock the wealth generated over 25 or 30 years but you can also access a simpler lifestyle.
The 2011 Census showed the high number of homes with owners living alone in house with unused bedrooms. For example, two thirds of Victorians who live alone and are aged over 65 do so in a house with 3 or more bedrooms.
The data, which is available on the REIV website, shows examples of the equity that could be unlocked by downsizing from a 4 to a 3 bedroom house, a 3 bedroom house to a 2 bedroom unit and from a 3 to a 2 bedroom unit.
Greatest downsize potential in inner suburbs
The suburbs with the greatest downsize potential are usually located in the inner to middle Melbourne suburbs such as Kew and Ivanhoe as well as along the bay in suburbs such as in Sandringham and Beaumaris. These suburbs generally have a high share of retirement aged, lone person households as well as relatively higher house prices.
This trend is already occurring in many parts of Melbourne, and the new research makes it simpler for those considering downsizing to establish a budget, construct a plan and then shop around for the right property.
Downsizing won’t be for everyone, but for those that do, you can access funds to help boost your retirement income. It’s worth noting that the State Government provides for discounts to stamp duty for pensioners and holders of Commonwealth Seniors cards for properties to a certain value.
Unlock your cash potential:
- Downsizing from a 4 to 3 bedroom house in Bentleigh could unlock $145,000
- Downsizing from a 3 bedroom house to a 2 bedroom unit in Brunswick could unlock $250,500
- Downsizing from a 3 to 2 bedroom unit in Blackburn could unlock $184,000
The REIV guide to downsizing is available here.