More than six million homeowners around the UK are currently considering downsizing. Research released earlier this year shows that 15% are thinking about buying a smaller property and in London, more than 25% say they are planning to do the same.
At the same time, Quickmove surveyed 7,000 UK home sellers and found that one-third of those questioned were planning on moving to a smaller property. Lower outgoings and easier maintenance were the main reasons homeowners wanted a smaller property.
When you decide to find a smaller property, the sale of your current home can often be held up by others in the property chain and in these cases, bridging loans can be very useful if you’re downsizing.
This was the case for one of our clients. Needing to sell a five-bedroom home to a smaller property in Warwickshire, David and Alison required to bridge so they could sell their existing property for the right price.
You can read all about how it worked here.
But property chains aren’t the only reason why bridging loans can be useful when downsizing.
Why use a bridging loan when downsizing?
It’s part of life that no matter how well you prepare, unexpected events thwart your plans. Co-ordinating the sale of your current property while buying another can create additional spending, stress and potential financial loss.
A bridging loan can be a useful financial tool when it comes to moving property – no matter the size of home but a bridging loan can be particularly useful when you want to downsize!
Avoid property chain issues
Anyone who has bought a property will know the biggest fear is the chain. The successful sale of your home and the purchase of your new one often depends on a number of people. You will have to wait for the person you’re buying from to move on from their property and there may be one or more vendor ahead of them that also needs to sell.
If any one of those sales falls through, you’ll be left waiting even longer and when you’re downsizing, this can leave you particularly vulnerable to losing out as you wait for sales ahead of you to complete but most people who are downsizing don’t have the same affordability issues because they have equity available.
A bridging loan can mean you break free from the property chain. You will be able to purchase your smaller property and exit the loan on completion of your existing property.
Reduce stress and time pressures
Property chains can create pressure when it comes to co-ordinating selling time. And that is very stressful. This strain is so severe that a recent study by Churchill found that one in 15 homes are improved or extended because the homeowner finds buying a new property too stressful.
But what if your family has moved on and you just don’t need all that space? Bridging finance can help you buy your new property as soon as it comes to the market. That means you won’t have the stress of wondering when you’ll be able to move into your new property.
Flexibility for renovations
Many buyers who downsize want to renovate their new property before moving in. Having equity in their existing property gives them the opportunity to spend their additional funds on creating their dream home. From the perfect kitchen to stunning conservatories, the ability to create the ideal home is more accessible to those downsizing.
Bridging loans provide flexibility with finances and time to complete these works, while you continue to live at your existing property. It means you don’t have to live in a building site and when work is complete, you can simply move in to your ideal home.
What should I do next?
Using a bridging loan when downsizing needs to be carefully planned. There are a range of factors to consider including:
- Valuation of both properties.
- Your equity in your current property.
- How to market and sell your existing property.
- Your exit strategy.
There are a number of other factors to consider. We’d be delighted to chat about whether bridging finance is right for you if you’re downsizing. Contact our experienced team today for details.
