During the midst of a cost of living crisis, many people are looking for ways to stretch their money further. Some are even looking to the assets they already have in their portfolio, like their homes, to help their financial situation. The current economy is affecting everyone differently, but everyone with a home is being impacted by the increased costs of household bills. Here is how your home could help — or hurt — your finances.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Rising cost of living
It should come as no surprise that increased energy bills, food costs, and fuel prices are having the biggest effect on people’s wallets. In some cases, if you have had to move house or remortgage recently, you might also be facing higher monthly repayments, adding to the stress you may already be experiencing.
Your mortgage is most likely your largest monthly expense, but there are ways to help reduce this cost. Cohabitating is one option, but not very appealing for many either because of personal preference or lack of opportunity to share their space with others. The biggest impact could come from relocation to a less expensive area or downsizing in your current area in order to save money.
Save money by downsizing or relocating
In certain regions of the country, such as Central London, house prices are consistently high. If you have a job that will allow you to easily relocate, consider this option. But, if you are bound to a certain location, finding a smaller home that still accommodates your needs and lifestyle could be a great option.
You can realise the financial benefits of downsizing through releasing equity from your larger home, reducing your monthly mortgage payments, or a combination of both.
And simply, a smaller home not only carries with it smaller repayments, but all of your household bills (except for food) will likely follow suit. Less space means it costs less money to run your home.
Though the savings will vary across the country, even eliminating one bedroom could help reduce your monthly payments significantly. The price jump from a two to a three-bedroom property can be over £100,000, so a home with fewer bedrooms could end up saving you hundreds of pounds each month. If you originally wanted extra rooms for guests or other uses, consider multi-purpose spaces in a smaller home to achieve the same ideas.
It’s important to remember that moving does come with its own set of costs and downsides. You could face early termination fees if your lender has rules about that, and moving usually carries its own set of expenses to worry about. Not to mention, some people might have trouble adjusting to less space or a new location and being in a new place, perhaps away from friends and family, could be a huge deterrent for many.
Of course, if it’s a viable option and you don’t have any concerns, downsizing or moving could have a significant, positive impact on your finances.
Ready to use your home to improve your finances?
If you’re considering downsizing or relocation as a way to save money and want to discuss the best options to lower your monthly costs, get in contact with the experts at Dental and Medical Financial Services today.