How to boost your finances without downsizing

Moving to a smaller property could be one way to free up some funds. But there are other ways to get a cash boost or save money without all the hassle of moving home.

We'll explore the various options in a moment. But first let’s look at some new research we’ve published into downsizing trends in the UK. The data – collected through insights from more than 1,000 Saga customers – reveals some interesting findings:

• The top reason people downsize is to reduce time and cost on maintenance.
• The next most popular reason for downsizing is to free up some capital.
• However, only one in five over-50s who own a home have downsized.

Some of our previous research found that having grandchildren can also be a reason for downsizing. Around 25% of grandparents spend an average of 36 hours providing care each month. As such, some people downsize to move closer to their families.

But our research shows that the majority of over-50s choose not to downsize.

Why don’t people want to downsize?

It seems that downsizing is not popular with over-50s living in the UK. In fact half of the people we surveyed have lived in their current home for over 20 years. They told us the top reasons for staying put include:

• Avoiding the upheaval of moving home.
• Not wanting to leave neighbours and the local community.
• Keeping the home as a hub for the family, with room for guests to stay.

The research also shows how much we all love our gardens, with two in three people feeling proud of their outdoor space – another reason for not wanting to move home. But beyond the emotional pull that our homes hold, there are some practical drawbacks to downsizing.

“Downsizing is a huge life decision for many of our customers,” says Alex Edmans, Product Director at Saga Money. “There are several considerations to think about, from whether you will be subject to Stamp Duty, the total moving costs and ensuring a smaller home still meets your needs. Before making a final decision, it’s worth getting expert advice.”

Ways to release money without downsizing

It might be possible to release money from your property or lower your monthly mortgage repayments without having to move home. With less than half of Saga customers looking to downsize, it's good to know there are other ways to boost your finances.

Remortgaging

One alternative to downsizing is remortgaging. When your current mortgage term ends, you could find a new deal with your current lender or switch to a different lender. Remortgaging could help you financially in two ways:

1. Secure a lower interest rate. If the market rates have fallen since you took out your current mortgage, you may be able to switch to a lower rate. This could reduce your monthly payments and overall interest costs.
2. Access equity in your home. If the value of your property has risen since you bought it (or you’ve paid a large amount of your loan), you might be able to access some of that equity as a cash lump sum.

With Saga Mortgages, provided by Tembo, you can apply for a new mortgage six months before your current deal ends. If the interest rates fall during that time, you can apply again at no extra charge. If the rates go up, we'll keep your lower rate safely locked in.

Remember that if you don’t keep up payments on your mortgage, your home may be repossessed.

Retirement-Interest-Only mortgage

Also known as a RIO mortgage, this type of product is only available to people over the age of 55. You repay the interest on the loan each month, but not the debt. This allows homeowners to borrow into retirement, while keeping their monthly mortgage costs low.

• RIO mortgages can help to reduce your mortgage costs if the current rates of interest are making payments difficult.
• They can also give you access to some of the equity in your property. This could help with the costs of travel plans, home improvements or even your loved ones buying a home of their own.

As with all mortgages, this is a loan secured against your home. It could be repossessed if you don't keep up payments on your mortgage. You can read more about the pros and cons of Retirement-Interest-Only mortgages.

Lifetime mortgage

Another way you could free up some of the wealth stored in your property is through a lifetime mortgage. You take out a loan secured against your home, which doesn't need to be repaid until you die or enter long-term care. Here’s how they work:

1. Lifetime mortgages are a bit like normal mortgages, but you don’t need to pay back any money while you’re still living in your home. Although you can pay off some or all of the interest if you want to.
2. You still get to own your home. The loan and the interest are usually paid back from the sale of your property after you die – or if you move into long-term care.
3. If you have a joint lifetime mortgage with another person, it stays in place until the last borrower dies or goes into long-term care.

Remember that a lifetime mortgage will reduce the value of the estate you leave to your loved ones. And it could affect any means-tested state benefits you receive.

The Saga Lifetime Mortgage is provided by Just and is exclusively available through Saga Equity Release. The advice you receive through Saga Equity Release is provided by HUB Financial Solutions. You (or the youngest borrower if you're taking out a joint mortgage) must be at least 55 years old and own a UK home worth at least £70,000. If you decide to take out a Saga Lifetime Mortgage you'll need to pay an advice fee of £799.