When to sell if cash poor and asset rich? Dilemma.

Fruitbat59

I am self-employed, my income is low and every month is a worry. I am 55 and will retire at 66, with just the state pension. I am, however, sitting in a mortgage-free house worth about £400k. I am considering downshifting to something a lot smaller to release some cash for peace of mind and the occasional holiday. Some say this is shortsighted and I should hang onto the property for as long as possible until retirement. Others say go for it as the housing market is buoyant and life is short. I would welcome some opinions please.

moneyistooshorttomention

The first thought that sprang to mind is that, if you waited to sell the house until the last minute (ie just before retirement), then there are some unscrupulous buyers that would spot that and try and play on it (ie by offering less for the house than its worth).

My second thought being "You never know....something (positive) just might come up and OP doesn't have to sell the house after all" and I would wait until about a year or two before retirement to sell if I were in that position. That being = plenty of time to sell without Vulture Buyers trying it on and yet staying in the house as long as possible on the other hand.

If there is a financial crash in the economy at some point soon - then I would rather keep my money locked-up in "bricks and mortar" than sitting in a bank account. Sitting in a bank account would mean it getting virtually zilch interest on it and it would be vulnerable to any bank bail-ins that happen (ie the Government stealing a bit of peoples savings by "taxing" savings over a certain level to find the money to do another bailout on the banks).

Overall = my verdict being to keep that house until not far off Retirement Day as the best bet in the circumstances...but not "5 minutes to Midnight" either...because of Vulture Buyers.

moneyistooshorttomention

My third thought being = what state of health are you in? are you at noticeable level risk of a serious health problem?

A personal factor like that also comes into play here.

Risk factors re health are not insurmountable. I know that I personally have absolutely terrible Genes and a huge huge risk of terrible health problems (ie from just looking at the awful health everyone has in my family) BUT my own health is just fine basically.

The difference between me and my Terribly Unhealthy Family is I look after my health and will instantly look into alternative therapies if anything does crop up.

On the other hand - you may have Terrible Health Problems already and don't anticipate being able to get rid of them.

That is very much a factor to take into account - and what you personally would do if Terrible Health Problems did crop up.

Pete9501

We have just downsized from a 4 bed to a 2 bed cottage as the kids have left home. All the bills have reduced from council tax to insurance, heating etc. The money saved is now over paying the mortgage.

If the OP downsized any money in the bank isn't going to earn much but a good IFA should be able to find a half decent investment platform. However, the reduced day to day costs of running a home would make a big difference to a limited income. It would also provide a safety net if something major happened, like roof falling off, injury at work.......

Pete

moneyistooshorttomention

As a self-employed person OP does need to take that sort of thing into account.

I recall suggesting to a friend of mine that went s.employed many years back that they needed to deal with things like income continuing to come in if they were ill and that they join a Friendly Society to ensure that would be sorted out.

In the event....they took my advice and in fact I landed up feeling sorry for the Friendly Society concerned - due to the claims they put in meaning they had got a Very Good Deal at the Friendly Society's expense.

Pete9501

Back of a fag packet calculation suggests we are about £120 a month better off after downsizing. Month in month out that isn't to be sniffed at.

The OP doesn't have a personal pension and at 55 it's probably too late. A loaded up ISA would offer more freedom. Trying to hang on until 66 might make more wealth in the long term, but it's a risk. The safe option would be to downsize, make life more comfortable for the next 11 years and plan a retirement with some investments.

borkid

Fruitbat59 wrote: »

I am self-employed, my income is low and every month is a worry. I am 55 and will retire at 66, with just the state pension. I am, however, sitting in a mortgage-free house worth about £400k. I am considering downshifting to something a lot smaller to release some cash for peace of mind and the occasional holiday. Some say this is shortsighted and I should hang onto the property for as long as possible until retirement. Others say go for it as the housing market is buoyant and life is short. I would welcome some opinions please.

If you want more cash coming in would a lodger be an option?

It would help with a couple of holidays if nothing else.

PasturesNew

Difficult. Sell now for £400k and downsize to £200k gives you a great lifestyle for 10-15 years spending that capital. But the question then is will you be able to downsize again to a £100-120k property when you're 70 and do the same again?

If £400k is "posh" and £200k is "quite a decent house" and £100k buys you a "retirement flat" then you're not trapping yourself too early at the bottom. If £400k is a 2-bed and £200k is a small 1-bed/studio then you can't downsize further in the future.

PlutoinCapricorn

Have you considered letting the house and buying a smaller property for yourself?

Taking care of a whole house can be an ever-increasing burden: I love my little studio flat all the more as I get older.

[Deleted User]

Letting a house is definitely not without risks and hassles.

bris

Sell and regret. Hold onto it and downsize nearer retirement.


Blowing all the cash now would be a mistake, on the other hand you could die tomorrow so live for today. It's a choice only you can make.