Downsizing House Tips for Surrey Homeowners

There are many different reasons why people choose to sell their home and move into a smaller one, from releasing the value tied up in their property to reducing the amount of upkeep involved.

If you have owned a property in Surrey areas including Hinchley Wood, Oxshott or Bookham for a number of years, your property value could have grown considerably.

Over the last decade, the average house price in Surrey has risen from £435,000 to around £520,000, according to the UK House Price Index. Twenty years ago, the average property price was under £270,000, so house prices in the area have almost doubled over this time.

Downsizing can allow homeowners to access the equity in their home to boost retirement funds, spend on holidays or to gift some money to family. However, there is a lot to think about before you decide whether it is the right decision for you.

This guide explains what downsizing involves and the pros and cons to consider before putting your home on the market.

What does it mean to downsize your house?

Downsizing involves selling your home and then moving into a smaller property. This often means selling a family home and moving into a retirement property that is more practical for living in as you get older.

By downsizing your home and buying a smaller one at a lower value, you may be able to release a substantial amount of money. For example, if your current property is mortgage-free and is valued at around £500,000, if you buy a smaller home for £250,000, you will be able to free up £250,000 minus the fees you will pay such as solicitors and estate agent fees. There are more costs to consider, which we cover in detail below.

What are the pros & cons of downsizing?

There are plenty of benefits of downsizing but there are also some cons to think about:

Pros of downsizing

• Release equity in your home to spend on whatever you choose, such as a more comfortable retirement lifestyle.
• Potential to pay off mortgage if there is any loan outstanding and become mortgage-free.
• Less maintenance such as cleaning and repairs, and lower energy costs.
• Opportunity to move closer to relatives or amenities.
• Option to buy a property that will be more suitable for your long term plans.

Cons of downsizing

• There will be costs involved in buying, selling and moving.
• You may have emotional attachment to the property.
• Moving house can be an upheaval and requires adjustment.
• Less space for belongings and hosting guests.

Want to find out more? Explore whether you can sell your house after equity release and discover how to avoid a broken property chain.

When should you downsize?

There is no right or wrong time to downsize but it is a decision you shouldn’t rush into. Take some time to weigh up all the pros and cons to make the decision that feels right for both your next chapter and your life beyond that.

Many people who choose to downsize will reflect upon factors such as:

• Is the home bigger than needed?
• Are housekeeping and garden maintenance tasks becoming a burden?
• Is now the right time to release equity so you can spend/invest it before you get older?
• Would moving to a new area or property type be more suitable?
• Are the costs such as mortgage payments and bills becoming harder to manage?

Downsizing your house tips

Before you put your property up for sale, it is a good idea to be well-prepared so that the process goes through as smoothly as possible. These are some downsizing tips that are worth bearing in mind:

• Start decluttering your property in advance, as moving to a smaller property may mean you have much less space for belongings.
• Speak to an experienced, local estate agent to discuss your plans and get a property valuation.
• Start looking for suitable properties that will meet your future needs.
• Calculate all the costs involved in home buying and selling.

What are the costs associated with downsizing a house?

To help you to budget for all the potential costs, these are the most common expenses you may need to pay:

Estate agent fees

Estate agent fees for selling your home will usually be a percentage of around 1% to 2% of the value.

Solicitors’ fees

You will need to pay solicitors’/conveyancing fees for both the selling and buying side of downsizing. Fee structures vary but are typically around £2,000 to £3,000 for selling and £1,000 to £1,500 for buying.

Stamp duty

You will usually have to pay stamp duty tax on the property that you buy. For a property valued at £300,000, this would be £5,000 based on the current stamp duty rates.

Home survey

When buying a property, it is recommended that you have a home survey completed. Surveys cost between £300 and £1,000 depending on the level of survey you choose.

Mortgage fees

If you are redeeming a mortgage or taking out a mortgage for the new property, there may be fees to pay. An early repayment charge may be applicable if you are within a fixed mortgage term (around 1% to 5% of the outstanding loan). Arranging a new mortgage may also have fees attached.

Removal costs

Hiring a removal company to move your belongings costs around £600 to £1,000, depending on the volume of items and services required. The cost of moving will also depend on the distance between the two properties.

Want to know more? Find out about choosing the best conveyancing solicitors to keep your move on track.

EPC (Energy Performance Certificate)

You will need to obtain an EPC when you market your property so that prospective buyers can see the energy performance information. An EPC costs between £60 and £120.

What are the alternatives to downsizing?

There are other options available if you decide that you do not want to downsize or if now does not feel like the right time. These include:

• Equity release: Taking out an equity release product such as a lifetime mortgage or home reversion is an alternative. If you prefer to stay in your property this may be a suitable option, but you should speak to a financial adviser to understand how the product will impact beneficiaries and how the interest accumulates on the loan.
• Part exchange: If the buying and selling processes feel overwhelming, you could consider a part exchange with a property developer. Rather than marketing your property, arranging viewings and negotiating offers, the developer buys your property, and you buy one of their properties. This option could mean that you achieve a lower price and you will have less options for the property you buy but it is a more straightforward process.
• Renting out your property: You could rent your larger home out to tenants and move into a smaller property with lower running costs. This will mean you generate rental income and you do not have to make a definite decision about what you do with your family home.

If you are considering downsizing, using an experienced, local estate agent will give you support and expertise to help you through every step of the journey. We can provide a valuation for your Surrey property, covering areas such as East Horsley and Cobham.