Downsizing to release equity while young

smiths84

I wanted to get some help and reassurance from others who have sold their beloved homes to free up cash. We have a beautiful house in a great area which we recently renovated adding around 20 per cent to its value. We have a smallish mortgage and a lot of equity in the house. My husband and I both work full time, both earning decent salaries. But we NEVER have any spare cash. I'm careful with money and honestly don't know where it all goes. Anyway, we're fed up so we're selling the house and buying somewhere smaller/in a less favoured area to get hold of some of the equity. We don't want flash cars and stuff - just to be able to go to the cinema, take the kids out, have a family holiday without having to worry or borrow.
Trouble is I'm really struggling with this psychologically. I know a lot of older people do it, but we're only in our late 30s. It really goes against the grain to "go backwards" in the housing market - even with the prospect of oodles of cash in the bank. Has anyone else done this and how did it go?

POSSETTE

Hi..Im 37 and hubby is 44,and we have just downsized..best thing i have ever done!!:T we had a 4 bed detatched in a nice area,near to work convinient for everything,but it was costing us our lives!!.we had enough money to run the house and pay the bills,but we also had a loan of 25k to cover too,on a new caravan and newish car,and new kitchen.i was working 7 days a week to do this and he was doing all overtime poss.We found a brand new house ,3bed semi,next to an area i wouldnt have dreamed of living due a dodgy reputation,we sold our £177k house and bought this one at £138k.we have paid off all our debts,been on hol to Las Vegas and helicoptered down the Grand Canyon,:eek: had endless weekends away in our caravan,i dont work in pub at weekends ,so we walk the dogs more,and go out together.Its SOOOO much better.As for the area..its great,the people are so friendly,it has a wrong image,even the indian couple who run the shop have never had a problem with yobs,as there are none!!just knowing if i see something for £20 i can buy it with no probs is great..do it..you will see...good luck;)

Bargain_Rzl

Hi On a side issue, you say you're "careful with money and honestly don't know where it all goes". Do you keep detailed accounts and/or a spending diary? Cos it would help to have a clear idea of where the cash is going and why, before you make any huge decisions like moving house. I can just envisage you moving to a smaller place and STILL finding that you're not quite sure where the money goes, IYSWIM.

susieb

We thought hard about this as we are moving to a different area for several unrelated reasons, and could not decide between going up the ladder, staying the same or downsizing. However our kids are only 8 and 4, so will be growing , wanting friends round, and it just seems the wrong time for us to go smaller. We have looked at loads of houses, and for us just decided that the extra 50k does get you a hell of a lot more for your money and as we are homely people and not party people, decided the extra home space was worth more to us than being mortgage free.

F_T_Buyer

Having a life is way more important than a flashy home IMHO. I think you're right with your priorities.

Have you considered renting? Usually you find larger houses a lot cheaper to rent than they cost to buy (interest on mortgage compared to rent). Maybe this is an option to consider too...

Debt_Free_Chick

Agree with F_T_Buyer.

You only need a house that meets your own needs - who cares if it's not as flash as someone elses? Whichever house you have, it will be "better" than some peoples and not as good as others. But be careful with those terms ... what is "better" and "not as good as"?

I really believe we should all set our own goals & priorities and bu88er what anyone else thinks. After all, we have to live our own lives and not those dictated to by other people - or magazines or TV programmes, for that matter.

I also agree with the comment about your money management i.e. that you are "careful with money and honestly don't know where it all goes". If you really were careful, you would know exactly where every single penny goes and you would be seeking out the best way to batter down all your usual bills.

I don't think that downsizing to release equity is a great idea ... simply to release equity to fritter away on holidays and leisure time. It's OK if you have a plan for it to provide you with more income, but not simply to "blow" on disposables.

Have you tried posting your budget on Debt-Free Wannabe? Posters on that board could suggest where you could cut back - and that would give you extra cash each month to spend.

Finally, do you have an emergency fund to cover the unexpected? Anything from the need to replace a broken washing machine to giving you income if either of you were out of work :eek:

HTH

JennyW_2

POSSETTE wrote:

Hi..Im 37 and hubby is 44,and we have just downsized..best thing i have ever done!!:T we had a 4 bed detatched in a nice area,near to work convinient for everything,but it was costing us our lives!!.we had enough money to run the house and pay the bills,but we also had a loan of 25k to cover too,on a new caravan and newish car,and new kitchen.i was working 7 days a week to do this and he was doing all overtime poss.We found a brand new house ,3bed semi,next to an area i wouldnt have dreamed of living due a dodgy reputation,we sold our £177k house and bought this one at £138k.we have paid off all our debts,been on hol to Las Vegas and helicoptered down the Grand Canyon,:eek: had endless weekends away in our caravan,i dont work in pub at weekends ,so we walk the dogs more,and go out together.Its SOOOO much better.As for the area..its great,the people are so friendly,it has a wrong image,even the indian couple who run the shop have never had a problem with yobs,as there are none!!just knowing if i see something for £20 i can buy it with no probs is great..do it..you will see...good luck;)

We're the same! We're both 39 and have just downsized to a flat in a nicer area :j We had a 3 bed house to clean and run and with just 2 adults, it amounts to a lot of unnecessary work and expense. We moved on Friday to a flat and it's so lovely not to think about all those rooms I have to hoover and clean. It's also meant a lower mortgage and lower monthly repayments :T Plus we released some equity to totally transform the flat (new kitchen/bathroom etc), whereas before with the bigger property and mortgage, we never had enough money to do anything nice.

I may even get my new car at the end of the year :rotfl:

Life's too short and you don't know what's around the corner - I learnt that 2 years ago when my dad died. Worked so blooming hard and didn't even get to retirement to start enjoying his life a bit :sad:

I don't see it as going backwards, if it means a better quality of life for you and less stress, then thats not going backwards, it just means your taking control of your life and enjoying it. No point in trying to enjoying it when you're too old to be able to do anything.

tomstickland

I'm a recent FTB and I bought the cheapest place I could find that I thought was worth the money. ie: i had to live somewhere I liked, but purposely aimed for the low end of the price range. As a result I've got a compact 1 bed flat that meets all of my needs, but no more. I love it, and the cost of ownership is a lot lower than buying a larger place.

However, don't buy a place if you have any doubts. Carefully think through the cost-result balance.

I went to visit a university friend the other day. Him and his OH live in a 5 bed detached house. I looked it up on nethouseprices and it'd sold for £270K. Initially I was minorly envious, but after thinking about it a bit I returned to contentment. I don't have a massive mortgage bill to meet every month.

Tassotti

Hi Tom,

Did you finish the decorating on your new gaff? I seem to remember you posting pics as you were doing it?

tomstickland

Yes, it took me 5 weeks in the end. It got to the "that'll have to do" stage and then I went on holiday for 10 days, came back and moved in. I've been living there since and I'm very happy. However, I still have loads of little jobs that need doing and aren't being done. Oh well.

Sapphire

tomstickland wrote:

However, I still have loads of little jobs that need doing and aren't being done. Oh well.

That's good, though. Always nice to 'develop' a place over a longish period of time, rather than to 'rip' everything out and instantly transform it into what the latest 'cool' magazines and TV programmes dictate. Bet a lot of people who have stuck to today's trends are going to be kicking themselves in a few years' time - or the people who buy their properties will be.

Feel it's somehow more creative to think about what you want to do to a place after you grow into it and get a feel for it . . .