Is downsizing the right move? Saga research shows the popularity of downsizing and the top considerations for homeowners

10^th June 2024: Saga, the UK's specialist in products and services for people over 50, has published new research into the popularity of downsizing in the UK and the top considerations for homeowners, as well as offering alternative solutions for how to release equity from your home.

The data, collected through insights from over 1,000 Saga customers, found that nearly one in five of all over 50s owner-occupiers had downsized. This represents- a total of nearly four million, or an average approaching 200,000 downsizers a year.

Of those who have made the move, the most common reason for downsizers was their desire to reduce the time and cost of maintenance, followed by the capital freed up by the move.

Grandchildren also have a huge impact on the lives of many Saga customers, with previous data finding that around 25% of grandparents spend an average of 36 hours providing care each month. As such, some downsizers are using the move as an opportunity to relocate closer to families, with a view to spending more time caring for their grandchildren.

However, downsizing is still an unpopular choice for many. Saga found that the main reasons for staying put include homeowners liking where they currently live and the local community, enjoying the space - particularly in the garden - and simply wanting to avoid the hassle of moving. Another major consideration is wanting to keep the home as hub for the family, with rooms for guests to stay.

With less than half of Saga customers looking to downsize, there are a number of alternative options homeowners can consider when looking to release equity, including remortgaging. The demand for mortgages for people over 55 has increased by an average of 8% over the past five years, making it the fastest-growing segment of the mortgage market*. However, eligibility criteria may vary, and homeowners might find that their pension or investment income isn't sufficient alone to pass lender's affordability tests.

If this is the case, homeowners might want to consider a Retirement-Interest-Only (RIO) mortgage instead. This is a type of mortgage available to people over 55. It works by repaying the interest on the loan each month, but not the debt, allowing homeowners to borrow into retirement, while keeping the monthly mortgage costs low. This is a particularly good way to help reduce mortgage costs if the current rates of interest are making existing mortgage payments difficult. As with all mortgages, this is a loan secured against the home which may be repossessed if mortgage repayments are not kept up.

Another way to free up some of the wealth stored in property is through a lifetime mortgage. This is a type of later life lending that allows homeowners to get a mortgage loan that's secured on their property, without the need for regular payments.

Alex Edmans, Product Director at Saga Money commented: "Downsizing is a huge life decision for many of our customers and there are a number of benefits of moving to a smaller property that extend way beyond just housing costs. However, it is not the only way to free up capital and 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. Experts like mortgage brokers, estate agents and wealth managers can help make sure you get the best mortgage for your circumstance, especially in today's high interest rate environment. With them, you will be able to work out if downsizing is the right course of action for you."

Saga is partnered with specialist mortgage broker Tembo Money, who provide a mortgage advice service and access to expert advice across over 100 lenders including all the high-street lenders as well as smaller specialist lenders and building societies.