As you get older, your mind inevitably starts to think about how you want to spend your days once you retire. One thing to consider is what you should do with your home. There are many different paths you can take, including downsizing, equity release and retirement villages and communities.
Downsizing
Downsizing is an option that many older people take when they retire. For many, selling up and buying a smaller house or bungalow near loved ones is exactly how they want to spend their retirement.
With a smaller home comes cheaper bills and maintenance which is ideal if you are living on a pension. Selling your house can also mean you can be mortgage-free into your retirement and you can use any spare money after you have purchased your new house to pay off any remaining mortgage payments. Or you can use the spare money to enjoy your retirement however you like!
Moving house can be a stressful experience but there is no need to rush it. Before you move, go through one room at a time and declutter. You will need to think about storage space in your new house so it may be time to make sure you are only holding on to sentimental items.
Equity release
Releasing equity in your house enables you to take out a lump sum from the value of your home. There are two main ways to do this: lifetime mortgages and home reversion.
A lifetime mortgage is where you take out a mortgage secured against your property, as long as you are the primary homeowner. Eventually, the loan amount and any interest accrued are settled when the last borrower passes on or moves into long-term care.
Home reversion is different as you sell part or the whole of your home to a home reversion company in exchange for a lump sum or regular payments. You are able to live in the property until you die but you will have to agree to maintain and insure it properly. Once the property is sold, the sale proceeds are shared according to the reversion agreement.
If you are considering releasing equity from your home, use an equity release calculator to find out how much you could get.
Retirement villages and communities
Retirement developments usually offer accommodation suitable for everyone, such as bungalows, houses and apartments. They are designed for people who are retired and want to continue living independently.
These communities offer more than just a place to live. They offer social engagement with like-minded people, easily accessible amenities and support services that are specifically tailored towards the needs of older adults. Retirement communities are often beneficial to couples who want to enjoy their retirement together.
It is worth noting that these properties are expensive and are often on the market at higher prices than normal houses. If you are set on a retirement community, however, plan ahead and specifically look out for less obvious fees, such as transfer fees and annual maintenance fees.