The decision to downsize is an important financial and life decision. It requires careful planning and weighing of the pros and cons before deciding if it’s right for you.

Downsizing is the act of moving from one home into another. This may be for physical reasons such as needing a smaller home or looking to live in a new location or financial reasons such as freeing up money for retirement. Typically downsizing involves the sale of your current home to purchase a new, less valuable one.

Here are some of the top things to keep in mind throughout your decision-making process.

• Increased cash flow: Downsizing could free up money to top up your super, pay off your mortgage or improve your retirement lifestyle. If you’re eligible, the government also offers a contribution of up to $300,000 from the proceeds of your home into your superannuation fund.
• Fit for purpose: A smaller home may have a more suitable layout and reduce the time spent on household tasks.
• Location: Your new home could be closer to family, services, recreation facilities and transport.
• Lower cost: Smaller homes are generally cheaper to run, easier to maintain and may cost less to insure.

• Unforeseen costs: Real estate fees, removalists, packing costs, stamp duty, and the cost of fitting out your new home are all expenses that need to be factored in and may cause additional stress.
• Emotional connection: Leaving a family home can be hard. After all, it’s where many memories have been created and milestones celebrated.
• Availability: Lack of suitable and affordable housing in your preferred area may mean you have to move further away than desired.
• Location: A new neighbourhood may mean finding new service providers and seeing you further removed from family and friends.
• Less space: A smaller home means making hard decisions about letting go of precious furniture and other objects, many of which also have emotional connections.

Each of these factors needs to be researched and thought through before taking any action.

If you decide your family home is the best place to see out your retirement, you could consider a Household Loan.

A Household Loan is a reverse mortgage and enables you to access the equity built up in your home.

It can be a good option if a lot of your wealth is tied up in the value of your home, but you want to enjoy your retirement years living there. There are several ways you can use the home equity accessed through a reverse mortgage. These include:

1. Increase your regular fortnightly or monthly income and improve your retirement lifestyle.
2. Top up your super or other invested funds.
3. Renovate or modify your home to make it safe and comfortable for retirement.
4. Refinance a home loan or pay down debt.
5. Cover medical expenses.
6. Give to your children or grandchildren when they need it most.
7. Choose your own in-home care service and tailor it to meet your needs.
8. Cover the costs of transitioning to residential aged care.

A Household Loan allows you to live in the home you love while enjoying the lifestyle you deserve.

If you’d like to learn more about using your home equity to improve your retirement funding:

• Speak to a Household Capital retirement specialist by calling 1300 760 139.
• Read this free e-guide.
• Check out Household Capital’s online calculator to see how using your home equity could improve your retirement.

Applications for credit are subject to eligibility and lending criteria. Fees and charges are payable, and terms and conditions apply (available upon request). Household Capital Pty Limited is a credit representative (512757) of Mortgage Direct Pty Limited ACN 075 721 434, Australian Credit Licence 391876.