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Move home or adapt? Financial considerations for retirees

People reaching retirement age often start looking at the options for downsizing for easier management and mobility, moving away from busy areas, or even upsizing to have the space for grandchildren to stay.

They might also be thinking about buying a cheaper property and using cash from the sale to help supplement their pension.

For any retirees currently debating a house move, Richard Eagling, Senior Personal Finance Expert at NerdWallet, suggests some key points to consider.

 Get the property valued properly 

The average UK house price topped £250,000 for the first time ever in April 2022. That means it’s important to get a good idea of what a house is worth in its current condition before you start the process of adding it to the market, especially if the current owners have been living there for a long time.

The Land Registry provides free access to records of housing transactions. You can break down the results by different criteria to get a rough idea of what similar homes in your area have sold for.

This same information is also used by property portals, such as Zoopla and Rightmove, to give you an indication of what your home might be worth. However, this is only a guide.

Some people opt to get their homes valued by estate agents. If you only get your home valued by a single estate agent, there is a danger it could be over or undervalued. But by getting a few different valuations, you can calculate an average.  Estate agent valuations are usually free, as the agents see an opportunity to convince the owner to use them to sell the home. Take time to consider who your or your parents feel comfortable with before choosing an agent.

 Look at the best ways to sell your existing property 

Once a property is on the market, there are some things you can implement to ensure it looks as desirable as possible to prospective buyers.

Firstly, declutter any rooms that may not have been cleared for years. Not only will this make the space look bigger, but it will also help buyers visualise themselves living in the property.

It’s also worth improving ‘kerb appeal’ to give the very best first impression to potential buyers. For example, you can check that the windows and roof are in excellent condition, hide the bins, tidy the front garden by removing weeds and mowing any grass, and make sure the driveway is well maintained.

Consider staying put

If you or your parents are thinking about moving because of growing mobility issues, it could be worth looking into making disability adjustments to the structure of the current home as an alternative to house sale.

There may be financial help available to make adjustments. If you or another family member living in the home is registered as disabled, it may be possible to apply for a grant from the local council to accommodate specific needs and requirements. These can include, for example, the widening of doors for wheelchair access, the installation of wheelchair ramps, installing stairlifts, constructing a bathroom in a downstairs area of the property, and moving lighting and heating controls to more accessible locations.

If a grant is not forthcoming, then a home improvement loan is another option.

 Is equity release a sensible choice?

Equity release is an option for those who want to raise money to fund retirement, but don’t necessarily want to sell their home to do so. Equity release refers to a range of products that let older homeowners access the money (equity) tied up in their home without having to move.

There are two forms of equity release options: a lifetime mortgage and a home reversion. 

A lifetime mortgage is a loan secured on the property, and the owner can choose to make repayments or let interest build up. The loan amount and any subsequent interest is then paid back when the home is sold, once the last borrower either dies or moves into long-term care.

Those who opt for home reversions ​​sell either part or all of the property and receive either a cash lump sum or payments made to help them with outgoings and the cost of living. They have the right to continue living at the property until their death, on the understanding that they continue to insure and maintain it.

Equity release products can have a significant impact on financial standing, inheritance, tax and benefits, and should only be considered alongside qualified professional advice.

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