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Your guide to downsizing your home

Simplify your life by downsizing your home the right way.

Downsizing your home can increase your cashflow in retirement, pay off your home loan debt and help you live a low-maintenance lifestyle. But only if you do it the right way.

1. Plan ahead for financing

You may be able to achieve your downsizing goals without a mortgage. If you’ve built up enough equity in your family home, you could get enough to buy a smaller home outright. If this is the case, you won’t have to worry about financing. But if you do need to source a home loan, your situation could get slightly trickier.

While banks are prohibited from discriminating based on age, they can decline you if they worried you can’t repay the debt. If you’re retired, or about to retire, you’ll need to have a steady source of income.

2. Beware of buying before you sell

Signing a contract for a new home while the sale of your old one is pending is a risky gamble. You could find yourself facing trouble selling — or selling for far less than you’d anticipated.

In the event you do buy a new home before selling your current home, you may need to access what’s known as a bridge loan. Bridge loans are short-term home loans that help cover periods of cash flow shortage. It’s a temporary solution while your home is on the market.

However, waiting to buy until you’ve sold your old home can save you the stress and uncertainty of having to source interim financing. If you have sufficient equity in your old home, being patient is likely your best bet.

3. Monitor the market

If you’ve owned your family home for some time, it’s likely you’ve built up quite a bit of equity and seen some strong capital gains. If you have the luxury of patience, watching the market can ensure you actually realize those capital gains.

Take a look at recent sales in your neighborhood to see whether you’re in an area that’s in high buyer demand. You’ll also want to pay attention to recent comparable sales to see what price other homes in the area have been fetching.

In monitoring the market, try to take a measured approach. Don’t sell in a panic if prices start to head south. Likewise, don’t sit on your hands trying to gamble on either the top or bottom of the market if you feel you can get a good price for your house now.

4. Cut through sentimentality

This might be the most difficult bit of advice to actually put into action. Selling the family home and downsizing is a monumental life event and there’s a lot of emotion involved. As much as you can, you’ll have to remain practical when making your decisions.

Decluttering can be the most emotional experience you face when downsizing. Buying a smaller home means you’ll have to divest yourself of many of the possessions you’ve spent your adult life accruing. Many of them will have sentimental value. To successfully downsize, you’ll have to ruthlessly prioritize which items to keep and which to get rid of.

5. Think about your future needs

It can be quite jarring to move from a large family home into a smaller property better suited to retirement. You can make the move a bit less jarring and keep yourself from buyer’s remorse if you put some thought into your likely future needs.

Are you likely to have family members moving back in with you in the future? Are you able to keep up with the maintenance required on your new property? Does the location of your new property meet your future social needs? Do you have easy access to amenities? Is it accessible — both for your current needs and how they may change as you age?

If you’re looking to downsize, you may well be moving into the property in which you’ll live for the rest of your life. It’s likely your needs and priorities will change in the years ahead. It’s worth putting some thought now into whether or not your new property will meet those needs.

Compare mortgage lenders

Compare top brands by home loan type, state availability and credit score. Select See rates to provide the lender with basic property and financial details for personalized rates.

Name Product Loan products offered State availability Min. credit score
Rocket Mortgage
(NMLS #3030)
Rocket Mortgage
Conventional, Jumbo, FHA, VA, Refinance
Available in all states
Streamline your mortgage from quote to final payment — all from your computer or phone.
(NMLS #1168)
Conventional, Jumbo, FHA, VA, USDA, Refinance
Not available in: NY
Great customer reviews and customized rate quotes in three minutes with no SSN needed.
(NMLS #1121636)
Conventional, Home equity, Refinance
Not available in: HI, MO, NM, NY
No hidden fees, multiple loan terms, and member discounts available.
Veterans United
(NMLS #1907)
Veterans United
Conventional, FHA, VA, USDA, Jumbo, Refinance
Available in all states
Veterans United stands out from other lenders for its focus on serving the military community.
(NMLS #330511)
Conventional, Jumbo, FHA, Refinance
Not available in: HI, MA, MN, NV, NH, VT, VA
Online preapproval in minutes and no origination fees with this direct lender.

Compare up to 4 providers

Bottom line

Downsizing can help you gain both financial and physical independence, particularly if you choose a home that will continue to meet your needs in the future. In an ideal situation, you won’t need a mortgage. But if that’s not the case, compare mortgage providers to find one that can help you downsize affordably.

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