Selling your house to fund retirement is a great idea. Not only you will be releasing equity tied into your home, by downsizing you will be also saving money on heating and council tax costs.
As retirement approaches, you may be seeking ways to increase your retirement income. Selling off any assets you own is a great way to go about this, but should you include your home?
This guide will explore the advantages and disadvantages of selling, and what you need to consider if you’re looking into it.
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Why might you consider selling your house to fund retirement?
Owning a property is likely to be your largest financial asset. As you approach retirement, this can be a major help when it comes to planning your post-work income.
Many retirees find themselves reevaluating what they want from their home. That large family house with the garden may have been a dream come true, but now it’s starting to feel a bit too big and exhausting.
If your children have left, you may be left with several unused bedrooms. With some equity in your property, selling it could be a great way to improve your finances and lifestyle.
What are the benefits of selling your home to fund retirement?
There are many advantages to selling your property to fund your retirement. These include:
- Releasing a substantial amount of money – Selling your house and downsizing to a smaller home could result in a large sum of money being released. This money could be added to your pension fund, or invested elsewhere to provide an extra source of income during retirement. You could still invest in a smaller property, which could be released later on or left as an inheritance.
- Lowering your monthly expenses – Downsizing to a smaller home could significantly reduce your monthly expenses.
- This could leave you with more money to put into savings or invest for a passive income.
- Spending less on property maintenance – Property maintenance charges can be expensive, particularly for larger or older properties. Selling your home and moving to a smaller, lower-maintenance property could have a positive effect on your financial security in later life.
What might be the downsides to selling your house for retirement?
Making the decision to relocate may not be straightforward, even if it makes sense financially. You likely have many fond memories of your current home, so saying goodbye might not be easy.
- If you intend to sell your house and buy or rent something smaller, it is important to consider the decluttering that may be necessary. If you’ve lived in your current home for many years, you might be surprised at the amount of stuff you have accumulated.
- Decluttering can be daunting, but it can have a positive effect on both your financial situation and mental health. There is a great demand for second-hand goods and furniture as people are becoming increasingly conscious of the environment and their finances. Any profits you make from selling your unwanted items can be added to your retirement funds.
- Beginning the decluttering process before you start looking for a new home will help you to determine what you need and want from your next property, in terms of size and lifestyle.
What else should you think about if you’re considering selling your house to access the cash tied up in it?
- It’s important to think about the amount of equity you have in your property and what would remain after the move. Consider costs such as conveyancing fees, removal expenses, and estate agency fees.
- Do you want to stay in the same area or relocate to a new one? Retirement offers the chance to move to a place like the coast, or closer to family and friends.
- Would you like to look into a purpose-built retirement property? These homes can offer social advantages and some may even provide additional support if needed.
How else can you access the equity in your property for retirement?
If you’re worried about having enough money for retirement and owning a home with equity, there are a few ways to use that equity to help. One option is to sell your house to fund your retirement.
If you’d like to stay in your current home but need financial assistance, you could look into property equity release via a lifetime mortgage. The main benefit of using a lifetime mortgage to access the money in your property is that you don’t have to move out.
However, you should keep in mind that you’ll be charged interest on the money you borrow. The interest rate is usually higher than standard mortgage interest rates, and the more you borrow in relation to the property’s value, the higher the interest rate.
You can either make monthly repayments, as you would with a standard mortgage or let the interest accumulate and pay off the loan when the property is sold.
Consider that monthly payments may be an extra cost in retirement when income is usually lower, but leaving the interest accumulated will have an impact on any inheritance you hope to leave.
Before deciding if selling your home is a good idea, think about your individual circumstances and financial health.
It can help you access the cash in your home and provide additional retirement income, but any house move is a big step, so it’s important to assess all your options and get independent financial advice if necessary.
6 top tips for putting together a retirement plan
- Saving early is the best way to get ready for retirement! With more time to put money aside, you could end up with a lot more opportunities like moving or emigrating. Retirement should be a relaxing time, and starting early lets you have the income to enjoy life.
- You don’t have to go it alone. Get advice from a professional; research, ask questions and get advice ASAP to make sure you’re making the best decisions for yourself.
- Take a close look at your expenses. Keeping track of what you’re spending will help you plan for the income you’ll need when you retire.
- An annuity is another way to secure a steady income for life. Your pension is put away until you retire, then it can be converted into a regular income. But, it’s important to talk to a financial advisor to make sure you’re getting the right annuity for your needs and goals.
- Risk-taking can increase your retirement funds, but it’s better to take the risks when you’re younger. If things don’t go as planned, you’ll have more time to recover. Talk to a professional to make sure you’re taking the right risks.
- Creating a budget can help you save money and boost your retirement funds. Even small amounts will make a difference, so try to keep an eye on your finances.
You’ve worked hard and it’s time to enjoy your retirement. Selling your home is a big decision, but it could open up new opportunities and provide you with the funds to meet your retirement goals.
Should I sell my house and rent when I retire?
Retirement is a key moment in one’s life, offering a variety of options and decisions, particularly when it comes to housing. Many people ask themselves the age-old question: “Should I sell my house and rent once I retire?”
Pros of Selling and Renting:
- Flexibility: Renting allows you to live a more mobile lifestyle. If you’ve ever dreamt of living by the sea or close to the grandkids, now’s your chance!
- No Maintenance Worries: Taking care of a property can become difficult, particularly in older age. When you rent, the responsibility is shifted to the landlord.
- Financial Liquidity: Selling your house can give a significant boost to your retirement savings, offering you more resources to enjoy this new phase of life.
Cons of Selling and Renting:
- Renting Costs: Depending on where you live, monthly rent could eat into your retirement savings.
- Loss of Asset: Your home could increase in value over time. By selling, you could miss out on potential future profits.
- Emotional Attachment: For many, the family home is full of memories. Leaving it can be emotionally hard.
The decision mainly depends on your situation, financial well-being, and retirement goals. Consider consulting a financial expert to understand how selling your home would affect your retirement plans.
Ultimately, the choice should match the lifestyle you imagine for your golden years.
Can you fund your retirement by selling your house?
Dreaming of a stress-free retirement can lead us to assess our most valuable assets. For many, the family home is the most prominent one. However, the question remains: “Will selling your house really help finance your retirement?”
Points to Consider:
Before making any decisions, it is important to consider the current market value of your home and compare it to your expected retirement expenses.
- Retirement can last for many years, so make sure that the sale price is compatible with your long-term financial needs.
- Take into account all the transaction fees, agent fees, and taxes that may be associated with the sale. This will help you estimate your net profit more accurately.
- Once your home is sold, you will need to decide if you want to buy a smaller, more affordable home or rent. Both of these decisions have financial implications that you should consider. Buying provides stability while renting allows for flexibility but may require a consistent expenditure.
- The sale of your home can free up a significant amount of capital. Wisely investing this money can provide steady returns, which could fund a large portion of your retirement.
- In addition to the financial aspects, selling a family home can be emotionally draining. Take into account the sentimental value of your home in comparison to the financial gains.
- Ultimately, selling your home should be viewed as part of a larger retirement plan. Work with a financial planner to ensure that this decision fits into your overall retirement plan so that you can relax and enjoy your post-work years.
Can Property Saviour Help?
If you have come to the conclusion that selling your home is the best option for you, Property Saviour can help you make it happen with ease and speed – in as little as 7 days.
By getting a cash offer, you can be in 100% control of the sale of your property. You can buy your next property, relocate or move abroad with peace of mind.
There are no estate agency fees to pay. No legal fees to pay. We’ll pay £1,500 towards your legal fees. You are welcome to use your own solicitor.
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
