Downsizing or “rightsizing”? What you should know about moving post retirement

Well if you’ve been contemplating moving somewhere a little smaller lately, you’re probably not alone. According to a recent study from the Australian Housing and Urban Research Institute, more than half of Aussies aged 55 or over have downsized or are thinking about it.

But downsizing isn’t about downgrading. As Dr Amity James from Curtin’s School of Economics, Finance and Property said, “While downsizing may include a reduction in dwelling size, to older Australians it points to a housing aspiration where the internal and outdoor spaces are manageable, and represents a financial benefit.”

So it’s not so much about downsizing, as it is about “rightsizing” - that is finding a home more suitable for your current life needs. In fact, the research revealed that nearly two thirds of those surveyed, who had already downsized, still had at least one extra bedroom.

What are the advantages of downsizing?

While there may be any number of reasons to move after retirement, the report found that lifestyle, finances and having less space to maintain are the biggest motivators when it comes to packing up and moving out.

Less space equals less areas to clean and make presentable. Less sinks and taps should mean less water used and lower water bills, while less rooms means less lights and heating and cheaper electricity bills.

RELATED ARTICLE: How to save up a nest egg and reduce stress about retirement finances

What does downsizing entail?

Now that you’ve made the decision to look for somewhere a little more compact, the logical next step is to sell your current property and start house hunting anew.

Of course, as with most things in life it really isn’t that simple. Not only is moving an arduous task, but there are a few things to keep in mind when selling up and buying post-retirement age.

1. What comes first, buying or selling?

This is a question that will apply no matter what age you are, and there’s no one-size-fits-all solution. That said, there are pros and cons to both.

If you sell first you’ll have money upfront to pay for your new place, which means you won’t have to worry about depleting your savings for a deposit.

Of course on the flipside of that, if you sell up before finding a new place, you’ll need to find somewhere to store your stuff in the interim, and you’ll want to make sure you’ve got temporary accommodation sorted out, preferably without squandering your money on rent.

Check out our guide, Sell or buy, which to do first? for more information on the process of selling your home and buying a new one.

2. Will I need a home loan?

Whether you’ll need to take out a home loan or not will depend on your individual finances. If you decide to sell up first and buy a place with a lower price tag, you may be able to avoid borrowing money. Or, if you just need an extra bit of cash to see you through the buying and selling stage, you could potentially use a bridging loan to see you through.

If your dream home or apartment is more than the selling price of your current place, then you may have to take out a home loan to tide you over. Of course, if you’ve just sold then you’ll probably have a bigger deposit to put down, meaning a much lower loan to value ratio and the ability to snag a more competitive interest rate. 

3. Can I take out a home loan as a mature borrower?

The answer is yes, but you may be limited as to which providers will lend to you and you may not be able to get a loan with the best interest rate. 

Over the age of 55 most lenders will require you to provide a written exit strategy. This will usually include evidence of your superannuation and the value of other assets that can be sold off to cover your loan, such as investment properties or any shares you may hold. Lenders may also require you to provide an exit strategy, if you will be more than 75 years of age by the end of the loan term.

Just keep in mind each lender may have slightly different rules, so it’s worth checking in with them on your eligibility.

So, thinking about taking out a home loan to finance your next big life adventure? Why not head to Mozo’s home loans comparison page to see what’s out there or, take a look at the loans and interest rates on offer below.

Compare home loan interest rates - last updated 23 April 2024

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  • Mozo Expert Choice Badge
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    Owner Occupier, Principal & Interest, LVR <90%

    interest rate
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    Initial monthly repayment
    6.01% p.a. variable
    6.14% p.a.

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    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
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    Initial monthly repayment
    6.14% p.a. variable
    6.16% p.a.

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

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    Fixed, Owner Occupier, Principal & Interest, LVR <60%

    interest rate
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    Initial monthly repayment
    5.99% p.a.
    fixed 3 years
    6.37% p.a.

    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.


* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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