Tops Tips for The Over-50s Buying Their Retirement Property

By David Leto

| Photographs By Wavebreakmedia

Over the course of your life you will have bought, sold and rented properties, which means you’ll know your way around the process. Where this differs, however, is that when it comes to your retirement home or your final home you’ll buy, you need to get it right.

As much as the current family home offers in cherished memories, the sentiment doesn’t pay the bills, and sometimes a large family property simply becomes hard to for the occupants to keep up with as they get older. 

As you may have guessed, there is a whole host of reasons why over-50s homeowners may want to move, so there is never a typical last-time buyer. Some want to move to be closer to family, some want to downsize, some want to upgrade to their dream home, others may want to move to a quieter location. 

Many downsize to release equity to help fund retirement, while others are motivated by the lower operating costs of a smaller home. For older homeowners with mobility issues, bungalows become attractive, as do small retirement flats in buildings with elevators.

Of course, it is situation-dependent, but for whatever reason you may want to relocate, make sure you consider all of your options first. 

Below we’ve outlined some of the top things to take into consideration, but remember to take independent and professional advice if you want to be clear how your home could affect your inheritance, cost of care and eligibility for government benefits.

1. Don’t Get Above Your Means

A simple-enough-sounding point but one that often gets overlooked. Many over-50s overstretch themselves on their final home purchase because they want that really special retreat and just go for it. 

While you shouldn’t ever back down from your dream home, at this time you need to be practical and cost-effective. Ill health sadly becomes more common after 60 so although you may plan to work well into your 70s, your body might have other ideas. 

A well-paying job you may have now may be lost, and if you struggle to find another, it could leave you vulnerable financially if you’ve just bought a big home. 

Mortgage lenders will also restrict your ability to borrow into your old age, with most limiting mortgage terms to finish by your 75th birthday, and of course you must prove that your income stacks up. 

But it’s up to you to be cautious too, because if you get it wrong you may have to sell your dream home, and there are no guarantees that you will get the price you want for it.

2. Consider Downsizing

If you’re in your 50s or 60s you may not feel like you’re ready for this, as most empty nesters don’t. However, you need to be practical and think of the bigger picture.

Say you have a large house that was filled with your children before they all moved out. Now that they’re gone, you must keep up this large home where most of the space is unneeded. You could downsize, cash in and find a smaller place that meets your needs. By doing this you get a greater nest egg to treat yourself or your children. 

A step often dismissed, downsizing is in fact one of the best moves you can make as an over-50s adult. If you want to use your retirement to travel, this gives you the freedom to do so. 

We all know how poor pensions are these days, so why not consider a downsize, as it could give you that money you need now?

Furthermore, retirement is a great time to invest in property as a whole, so you could put some of the gained money into rentable properties that give you consistent income while you enjoy your retirement. The bonus is that there are loads of properties to invest in, whether  commercial or residential. If you don’t know where to start, it may be best to seek professional help from local real estate agents or commercial property agents.

3. It’s All About Location

You may picture yourself spending your later years in an idyllic rural retreat, and that’s ideal for some. No doubt you currently drive a car and can easily get to where you need to be. 

There is no reason you can’t drive a car until the day you die, but in practice, many people do stop driving in their later years or cut down the number of longer journeys they make. 

Because of this, it’s important to consider access to public transport when you think about the location of your last-time buy.

4. Get Advice

If you’re considering your last property purchase, don’t forget to think about your inheritance. Maybe you’re considering the release of equity to give your loved ones now or maybe you want to buy a bigger family home to pass on in the future. 

Whatever it is, you need to consider your position financially, legally and from a tax viewpoint. Not only are there issues surrounding inheritance tax, but increasingly people are beginning to think about the possible cost of long-term care. Your property’s value comes into play here, along with your other assets. 

It is key that you know the rules and regulations of giving money or property to your children. Seek professional advice from tax professionals, as they’ll be able to explain your best available options.

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