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Should I Sell My Property and Rent?

By: Emma Eilbeck BA (hons) - Updated: 21 Jul 2010 | comments*Discuss
Property Rent House Mortgage Retirement

Having a mortgage is not for everyone and once you hit retirement you can find that the burden of having a mortgage or even owning your own property is too much.

More and more people are starting to turn their back on home ownership in retirement and choosing to rent instead. Renting might be a great way to save money but property is still the number one investment, so if you can it is worth trying to keep hold of your property.

Does It Make Financial Sense To Rent?

Your financial situation should play a large part in your decision to rent or to keep hold of your property. If you are still paying your mortgage it might make more financial sense to keep paying your mortgage if you only have a few years left on your deal.

If you switch your mortgage for rent you might ultimately find that you are losing money. If your financial situation is dire and you can no longer afford your mortgage payments you should look at downsizing to a smaller property and using the equity that you have in your property to pay off any debt you might have. It will be a lot harder to get a mortgage if you are retired, so you should not really rely on this as one of your options.

Although renting will initially free up some cash if you sell the property you should calculate how long you can afford to pay rent for and live off the money from the sale of your house. It might make more sense to downsize instead so you are not paying rent.

Would You Leave Your Property For Your Children?

It is not only yourself that you may need to take into consideration if you are selling your home. A lot of parents like to consult their children and get their feedback on whether they should sell their home.

Although the decision is ultimately yours it can help to get their opinion and make them aware that you may no longer be leaving your house to them in your will. If you feel you would like to leave the property to them you may want to consider this when making your decision.

Your Current Home

An Englishman’s home is his castle so wherever possible you should try and hold onto it. There are however some scenarios where it can make sense to sell your home. If you are pottering around in a large house and you don’t need all the room there is no harm in downsizing.

If your home is in disrepair and you can’t afford to keep up the repairs than a landlord/landlady would be able to take care of this which is one advantage.

In the long-run selling your home might free up a large amount of capital but further down the line you will have to pay monthly rent payments, which could outweigh the lump sum.

In some instances selling your property in retirement can do more harm than good. An Englishman’s home is his castle and it can be nice to feel safe and have the security of your own home in retirement. Equally though, owning your own home can be expensive and sometimes it makes more sense let someone else fix the repairs and faults with your house, it can be a tricky decision to make.

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Your article ‘Should I sell my property and rent,’ highlighted a number of interesting issues. There is a growing number of retired people who are opting to rent in retirement. According to new figures from the Homelet rental index - 1,074 people aged between 66 and 70 have sold up to rent in the last year – a rise of 16%. We have also seen a 32% rise in enquiries for retirement rental properties in recent years. However, your advice that ‘people should try to hang on to their homes at all costs’ rather than rent because of the potential high costs of renting and because owning a home is more ‘secure’ fails to mention that people can rent on assured or lifetime tenancies in retirement – affording them the same level of security in their homes as home ownership. We know from talking to our residents that this is the top priority for the majority of people who choose to rent in retirement. Also, far from costing more, selling your home and renting can be the ultimate in equity release – particularly in the current economic climate. With inflation now at 5%, the stock market in free fall and low interest rates eroding any savings potential, older people increasingly need to access capital tied up in property. Elderly people in Britain have £3 trillion tied up in property and many of them need this money to simply fund their living. Renting on assured tenancies will enable them to invest capital from a house sale to fund retirement and live without the burden and cost of homeownership. For many people in later life this is a preferable option.
Peter Girling - 3-Nov-11 @ 5:06 PM
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