The decision to downsize is often not an easy one to make. Those who have faced retrenchment or ongoing salary cuts due to lockdown restrictions should consider whether their financial situation could become more manageable if they choose to downscale.
Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa explains that as tough as it might be, homeowners will stand a much better chance of recouping their losses and bolstering their financial position if they sell before they start falling behind on their bond repayments.
“The process of adjusting to a smaller living space is filled with complicated emotions that are often easier to deal with when you have arrived at the decision willingly rather than begrudgingly if and when the bank forecloses on the property,” he explains.
Understanding that this is not always an easy decision to make, Goslett offers his insights into how downscaling might afford homeowners more financial freedom. “The true saving in downsizing is not necessarily the profit from the sale, but what homeowners stand to save on their monthly home loan repayments. Sellers might not get as much out of the sale as they had hoped after factoring in all the costs involved, such as the outstanding bond amount, agent commissions, cancellation fees, etc. But, after moving to a smaller home, sellers will have more disposable income in their monthly budget to help them pay off or avoid getting into further debt.”
Another important factor is the money homeowners will save on maintaining a smaller home. “Having a smaller space means that your electricity and water bills are likely to be much lower. If you had a large garden, you will also save on the costs of garden maintenance.”
Rather than focusing on what is being lost, Goslett encourages homeowners to focus on what they stand to gain. “Create excitement around the new home by planning how each of the rooms will look after moving in. For those who can afford it, donate the items that will not fit into the new home rather than sell them. Knowing that the donation will help somebody in even greater need than oneself can often help one deal with the pain of letting go of that item,” he explains.
