There comes a point when the home that once suited you perfectly starts to feel like too much, and downsizing becomes a real option.
- The kids have moved out.
- The spare bedrooms mostly collect dust.
- The garden you once enjoyed now takes up half your weekend.
But becoming an empty nester isn’t the only reason people consider downsizing their home. You might be preparing for retirement, hoping to reduce your mortgage, wanting less maintenance, or looking to move closer to family. Changes in health or mobility can also make a smaller, more accessible home appealing.
Or perhaps you simply want more time to enjoy life and less time looking after a property.
Whatever your reason, downsizing is a big decision. Before you put up the “For Sale” sign, it’s worth asking: will this move give me the lifestyle and financial position I’m looking for?
Before you start looking at properties, think about what you want your everyday life to look like.
Would you like to walk to the shops?
Spend more time travelling?
Be closer to the grandchildren?
Stop spending Saturdays cleaning rooms you barely use?
Being clear about why you want to move helps you work out what the next home needs to offer.
If less maintenance is your priority, another house with a demanding garden might not solve the problem. If being closer to family matters most, location might be more important than the number of bedrooms.
And be honest about what you still need. Downsizing doesn’t have to mean giving up a hobby room, space for visitors or somewhere to sit outside with a cup of coffee.
There’s an emotional side, too. A family home holds memories. Leaving it can feel significant, even when you’re excited about what comes next.
Give yourself time to work through that. You don’t need to rush a decision just because the house feels a little quiet.
Start with the life you want, then look for a home that supports it.
Will a Smaller Home Actually Leave You Better Off?
It’s easy to assume that selling a larger home and buying a smaller one will leave plenty of money in the bank.
Sometimes it does. But smaller doesn’t automatically mean cheaper.
A modern apartment in a sought-after location could cost as much as the house you’re selling. And the difference between the two prices isn’t necessarily the amount you’ll have left over.
For a simple illustration, suppose you sell for $900,000 and buy for $650,000. That’s a $250,000 difference.
But if you still owe $150,000 on your existing mortgage, you’re left with $100,000 before selling, buying and moving costs.
That’s a very different starting point.
Look at the ongoing budget as well. What would you spend each month in the new home? Would you still have a mortgage? How much would remain for savings, travel and everyday living?
The useful question is:
“After everything is paid for, will this move put me in a position I’m comfortable with?”
The answer might involve more money, more freedom or simply a home that’s easier to manage. Be clear about which benefits matter most to you.
The Costs of Moving: What to Budget For
Before deciding what you can spend on your next property, make room for the cost of getting there.
Depending on your circumstances, your moving budget may need to include:
- Real estate agent fees and marketing costs.
- Repairs or presentation work before selling.
- Conveyancing and legal fees.
- Transfer duty, often called stamp duty, where applicable.
- Building and pest inspections.
- Loan discharge costs and any new loan fees.
- Removalists, storage or temporary accommodation.
Then look beyond moving day. A smaller property may reduce some expenses, but an apartment or townhouse can introduce body corporate or strata levies. Check those costs and any planned major works before committing. Moneysmart’s guide to downsizing outlines the main costs and trade-offs to consider.
You might still decide the move is absolutely worthwhile. The aim is to make that decision with a realistic budget.
You don’t want to unpack the last box and discover your financial breathing room is smaller than expected.
Finding a Home That Fits Your Next Chapter
A property can look lovely at an inspection and still be awkward to live in.
Think about an ordinary week in the home. Where will you park? How will you bring in the groceries? Is there enough storage? Can you get to the places you regularly visit without a long drive?
Consider how your needs might change, too.
Stairs may be manageable today, but would you prefer single-level living for the longer term? If you’re considering an apartment, is there a lift? Is the bathroom layout practical?
A useful checklist includes:
- Access to shops, transport and health services.
- Distance from family, friends and your existing community.
- Steps, stairs and ease of entry.
- Space for hobbies, visitors and pets.
- Parking, storage and outdoor areas.
- The amount of maintenance you’re willing to take on.
Try visiting the neighbourhood at different times of day. A peaceful midmorning inspection won’t necessarily tell you what traffic or noise is like in the evening.
And think carefully about the things you enjoy in your current home. You may be happy to lose two bedrooms but really miss a private outdoor space.
The right home should make everyday life easier while keeping room for the things you value.
Before You Sell: Get Your Finances and Timing in Order
Selling one home and buying another involves a few moving parts.
If you sell first, you’ll have more certainty about your sale proceeds, but you may need somewhere to stay while you find your next property.
If you buy first, you’ll need a clear plan for paying for the purchase before your existing home settles. Don’t assume the sale and purchase dates will line up neatly.
If you’ll need finance, speak with your broker early so you can understand what may be possible before making a commitment.
For anyone downsizing in retirement, there’s another consideration: selling your home and retaining money from the sale can affect your Age Pension or other government benefits. Moneysmart recommends checking the implications with Services Australia’s Financial Information Service.
Your broker can help with lending questions, while a financial adviser or tax adviser can help assess broader retirement and tax considerations.
Getting those answers early gives you a clearer picture of what you can spend, what you’ll have left, and how the move fits your plans.
Downsizing can be the beginning of a rewarding new chapter. The best place to start is with a clear idea of what you want that chapter to look like—and the numbers to support it.
Thinking about downsizing and wondering what it means for your home loan? Have a chat with Alan Taylor at Diamondmine Home Loans about your lending options and how to plan your next move.
You can find out more about home ownership and applying for a mortgage at our resources page www.diamondminehomeloans.com.au/resources/ or on our YouTube channel https://www.youtube.com/@FridayMoneyWinedup
