Downsizing before you retire is trending. Is it the right move for you?

If you’re trading up

At first, it seemed like a unique situation – we were starting to get calls from clients who were interested in scaling down once their kids were in university or close to ‘launching’. Then we noticed that question was being asked more and more.

The lightbulb moment

Maybe Covid has made a lot of us take stock of our lives and how we’re living. Maybe interest rates and inflation are making us take a closer look at what we’re spending our money on.

Whatever the catalyst is, a lot of people are realizing the power of the equity they have in their homes and what it could mean for their lives to free that equity up for, well, living.

Taking a closer look

That house that you worked hard to trade up to, the street you aspired to be on in the right school district, the big yard that you wanted so your kids could play suddenly doesn’t mean as much as it used to, if anything at all. A fraction of the house is being used these days.

What downsizing could mean

For some, it could mean semi or early retirement. For others, it means no more worries about mortgage rates and expenses for an asset you no longer need. Somewhere in between is the ability to check off that bucket list for amazing travel adventures or a secondary vacation property.

It’s worth taking a look at some scenarios to see how your finances…and your life could change.

What if they come back?

That’s the million dollar question! There are so many options that still have 3+ bedrooms that can still allow you to welcome them back into the nest for a period.

But as the expression goes, if you want them to move on, ‘ stop cooking with cheese’…maybe the big comfy house with all that room is the cheese?

Meet the Downsizers

‘Bob & Diana’ are based on a compilation of many of our clients journeys in downsizing…see anything familiar?

Bob & Diana had been in their home for 10 years. They have two kids – one just finished university and has been at their first ‘real’ job for a year and their youngest is in their second year of university and lives off-campus.

They had a 4 +1 bedroom home in prime Beach in a coveted school district set on a gorgeous property. While they refinanced at one point to do a renovation, they had gotten their mortgage down to a manageable level, or so they thought until their fixed term came up.

Diana wants to do some longer-term travel starting with Europe, Diana has the potential to quit her job at a large corporation and freelance if finances allowed for that leap. Bob was tired of the Canadian winters and has the ability to work remotely for periods of time and hoped for warmer weather down south.

While they knew that it was possible their youngest may come back home for a year or so after graduation, they knew they had a great deal of equity but also equally high monthly expenses on their remaining mortgage, property taxes and maintenance.

When they did the math they realized it was actually cheaper to help their son rent a place short term rather than carry the costs and keep the equity from working for them in their current home.

The Sell: They sold their home for just over $3.5M leaving them with approx. $2.5M in equity.

The Buy: They purchased a 2 bedroom + den condo with 2-car parking for just under $1.6M in the same neighbourhood.

The Gamechanger: They have no mortgage and the remaining equity was invested with the gains on that investment funding their travel with ample luxury.

Where do you start?

First, you’ll need to know what your home is worth and see what your downsizing options are to see if a move would make a meaningful difference in your life. Meet with one of our downsizing specialists for a consultation to find out what the future could hold for you. [email protected]