As you approach retirement, you may begin to see and hear the word ‘downsizing’ everywhere you go but, while swapping your large family home for something smaller and more manageable can be a great solution for some, understandably not everyone wants to part with their beloved slice of real estate heaven.
You’ve no doubt invested decades of hard-earned cash into the property, paid off your mortgage and spent painstaking hours painting, decorating and making the space your own, not to mention raised your children and enjoyed quality time with your grandkids within those four walls.
So, if you aren’t ready to give up your roomy house in the ‘burbs, here are 5 alternatives to downsizing that don’t involve selling your home.
You might be worrying about how you will afford the maintenance and upkeep of your family home in retirement, once you’ve waved goodbye to regular paychecks and have to rely on either your superannuation, income from investments or the Age Pension to get by. Fear not though, as there are ways that you can use your home to generate some extra income.
One of the most obvious ways to make some money is to rent out your spare bedrooms – which, if your children are grown and have families of their own, you may have several of. While you will of course have to declare the income, the additional money can go a long way in helping you to remain in the home and neighbourhood you love for longer. Websites like Airbnb have also made this option more accessible, although it does require a fair bit of commitment and can take up a lot of time to manage.
It’s not just bedrooms you can lease either, as you can also rent out less invasive areas of your property such as garages, basements (for storage) and even car parking spots. While it might sound odd, car parking spaces have become very lucrative in recent years, particularly in capital cities across the country. For example, the average car parking spot in Sydney’s CBD can demand a monthly rental fee of anywhere between $300 and $800 per month.
Hitting the open road with a caravan in tow is the dream for many Australian retirees, or those approaching the life stage. Becoming a grey nomad could also provide you with an alternative to downsizing though, as you can lease out your home while you’re travelling to fund your trip and earn some cash to pay for the upkeep of your home.
This can be arranged through a property manager or real estate agent, or using websites such as Airbnb. You could also consider house swapping, which is where you agree to switch homes with someone from another part of the globe and live in each other’s properties for an agreed period of time. Not only does this ensure that someone is looking after your home, it will also allow you to see other cities and countries at a reduced cost.
If you don’t want to part ways with your family home but are struggling to make ends meet in terms of maintenance, upkeep and perhaps even mortgage payments, why not get the kids involved? You could sell your home, or a proportion of it, to them or simply live alongside each other under one roof.
While it’s not the norm in Australian society for families to live together in multigenerational households, opening up your home to your kids and grandkids can be a simple way to solve your financial problems, removing the need to downsize.
Similarly to leasing rooms, opening your home to other likeminded retirees could be a way of filling some of your empty rooms and earning some extra income to help towards your bills and outgoings. The benefit of housesharing with other seniors though is that you are more likely to share similar interests and be going through similar experiences.
It all depends on what you’re looking for in a tenant or housemate though as if you’d rather have a paying lodger, with no expectation of interaction or companionship, then taking in a tenant, regardless of age, may be the better choice. It’s also important that you feel comfortable with someone before sharing your home with them, so holding interviews – perhaps with the help of a friend or family member – can be helpful.
If you aren’t open to the idea of living with strangers though, there’s always the option of releasing some equity from your home, which can be done through reverse mortgages or home reversion schemes.
A reverse mortgage is a type of loan that allows you to borrow money using the equity in your home as security, while home reversion schemes allow you to sell a proportion of your home’s future value for an agreed lump sum. Unlike reverse mortgages, home reversion schemes are not a loan and when your home is eventually sold you will be required to pay back the same proportion, regardless of the property’s current value.
There are risks associated with both schemes however, so it’s important to seek professional financial advice before you decide to go down this path.