 This article was contributed by Annie Button
Are you living in a home that is now too big for your needs? Is the mortgage paid off and you’re sitting on a large asset that you cannot easily tap into? Wouldn’t it be nice to have more retirement income to enable you to do all the things you love to do?
Downsizing your home is one obvious answer to solve the problem, but it is not the only solution. The decision to sell up, cash in, and buy somewhere smaller shouldn’t be taken lightly. Weigh up the pros and cons, and discuss your thoughts with family and close friends, and perhaps your accountant too.
If, after much deliberation, you come to the conclusion that downsizing your home is the right decision for the next stage of your life, then so be it. Contact several local estate agents for a market valuation and advice on the best sales strategy and time to sell, then choose the agent who offers the best service. But what if you don’t want to move house?
Why Should You Stay In Your Home?
If, on the other hand, you’ve decided that you don’t want to move, there may be countless reasons why it doesn’t feel right to leave your current property. You may hate the thought of leaving a much-loved family home where a lifetime of memories were made. Could a new property ever feel like home?
There are many beautiful places to move to in retirement, but starting again in a new location becomes harder as we get older. You may have spent many years building up your local support network and have everything you need in the neighbourhood you know and love, including good friends. Why would you want to leave all that behind?
What’s more, downsizing may not make financial sense, either, by the time you factor in transactional costs such as stamp duty, legal fees, and the cost of moving. Unless you move to a location where property prices are significantly cheaper, would you even make a net gain that’s worth having?
The alternative to moving to a smaller property is to stay put and make your current home work harder for you. In this article, we’ll show you a few ways that this could be done.
How Can You Make Your Home Work For You?
First off, you may never have considered your home to be anything other than a lovely place to live, with the security of knowing that it’s yours. Now it’s time for a new mindset. Start to think of your home as an investment – a bricks-and-mortar asset, to be precise – and consider different ways in which this asset could produce a tangible financial return for you. Let’s take a look at some of the options that may be available.
Take Out A Loan Against The Property
Assuming you now own the property outright, this is a sizeable financial asset that you can borrow against. A personal loan secured against your home will always be cheaper than an unsecured loan, generating a useful lump sum for you to spend as you wish.
You can also look into remortgaging the property. Eligibility criteria vary between lenders, but most do take pension and investment income into account when assessing affordability. If your retirement income is not sufficient, ask your mortgage broker or financial adviser about a retirement-interest-only (RIO) mortgage. You only need to prove that you can afford the monthly interest payments and the capital sum is paid off upon death.
Equity release is another option available to homeowners that are over 55 years old. “If you take out a lifetime mortgage, the fixed-rate loan is secured against your house and doesn’t have to be repaid until you go into long-term care or pass away,” explains one recent article. The money can be taken in several lump sum payments and used for whatever your preferred purpose is. For example, home improvements, an exciting holiday, financial help for your children, investments into stocks and shares, or extra income for yourself.
Generate Rental Income From A Spare Bedroom
If you are rattling around in a home that is too big for you, how about making some money from a spare bedroom? Becoming a landlord can be an excellent way to combine your need for additional income with the joy of meeting new people. Under the government’s Rent a Room Scheme, you can earn up to £7,500 per year, tax-free, by letting furnished accommodation.
There are several avenues you can pursue here. You could advertise for a long-term lodger, or you could offer seasonal homestay accommodation for English language students during high-demand periods in the spring and summer.
Another option is to put your spare room on Airbnb or, if you have several rooms available, start up a fledgling B&B business. You never know, it could be the start of a whole new career! If you’re interested in the latter, be advised that your property will have to comply with fire regulations and fire safety laws. You will also need public liability insurance and are required to register with HMRC for tax purposes.
Make Money From Other Areas Of Your Home
Bedrooms aren’t the only space that can be used to generate extra income from your home. If you live near a railway station or major entertainment venue, and have a garage or off-street parking, these are valuable facilities that are in high demand for commuters and visitors.
In fact, in some areas, these are so sought-after that several mobile apps have been developed to bring together supply and demand, and facilitate rental agreements. “Online parking marketplaces let you rent out car parking spaces – some people earn £200/month or more,” says Martin Lewis of MoneySavingExpert.
Other areas with rental potential are lofts, garages, and sheds that could be used for local storage. Advertise your private self-storage spaces on sites such as Storemates and Storenextdoor, charge, say, £10 a week for a 5-square-foot space, and make £520 per year.
Carry On Working – But On Your Terms
Finally, you may be retired but that doesn’t mean you can’t earn some additional income. The important thing is to do it on your terms, tapping into your passions, hobbies, and skills, and finding a commercial angle. Are you an artist able to sell some of your work? Do you love animals and could offer a dog walking service? Do you possess professional skills and could become a consultant? Maybe a part-time office job would be a good way to get out and about and meet people.
Spend some time assessing your strengths and priorities and see if it’s possible to lead an active retirement lifestyle that can also provide additional financial help.
They say life is what you make of it, and that goes for your autumn years, too. If you’re fit and healthy, and it is your heartfelt desire to stay in the home you know and love, consider the above advice to help make it possible.
Support Your Wellbeing at Home – Personal Alarms
Remaining comfortable in your own home is important, but what if you are living with health conditions or mobility issues? A personal alarm provides peace of mind to you and your loved ones. In an emergency, simply press the button on your alarm pendant and an alert will be sent to our 24/7 Response Team. After assessing the situation by speaking to you through the base unit loudspeaker, help is arranged by calling your emergency contacts and, if necessary, the emergency services.
For extra reassurance, you can upgrade your personal alarm to include fall detection, which sends an automatic alert when it senses a hard fall. Fall detection is also compatible with our revolutionary SmartLife alarm, which provides our fastest call connection speeds without requiring a phoneline.
To find out more, you can read our guide or get in touch. Call our sales team on 0800 030 8999 to order today, or order online.
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