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Need to raise cash? How to downsize to release equity in 2020

Cashing in your home’s equity by downsizing is one of the fastest ways of boosting your liquid assets

The subject of house prices is one of the nation’s favourite talking points, with an immense sense of pride in knowing how much wealth is held in bricks and mortar. Home owners have generally seen the value of their properties soar over the last two decades. In fact, research by the Halifax found a typical property worth £91,199 in 1999 was worth £279,997 at the end of 2019.

Cash in when you need it most

With sometimes hundreds of thousands of pounds tied up in equity, there are times when homeowners will need to access that reserve as cash. One way to benefit from a property’s rise in value is to downsize – or side shift – which means moving to a cheaper or smaller property to release equity. In fact, research from Prudential found the average downsizer could gain around £112,000 in savings by moving.

What is property equity?

Equity is the value of a property owned outright and is accrued over time as a home owner pays off their home loan. This chart explains what equity is and how it grows:-

Value of property Mortgage outstanding Equity
£350,000 £220,500 £129,500
£350,000 £101,000 £249,000
£350,000 £0 £350,000

Take financial advice

Downsizing to gain a cash lump sum only works if you make informed decisions regarding the current value of your property then balance this with how much mortgage debt you have and the value of the property you intend to buy. To find out where you stand, contact Open Property for an evaluation of your current situation. Our help includes a valuation for your property and an offer to buy your home for cash. Why not get your instant cash offer now?

Buy a smaller property

The traditional way to downsize is to move to a smaller home that costs less to buy. Many people who have ‘empty nests’ or who have retired find themselves in the position of being able to downsize but moving to a smaller, more affordable property can be a solution for anyone looking to free cash tied up in a bigger property – even if it’s only a temporary measure.

Make a side shift

If the idea of a smaller property doesn’t appeal, a side shift is worth considering. As there are house price variations across the country, it is possible to move to a similar sized property in a different geographical area and benefit from lower house prices.

Move to a rental property

If keeping as much of your equity as possible is crucial, selling your current home to Open Property and moving to a rental dewlling is a great way of reducing your moving costs. With tenants fees now banned and no stamp duty to pay, renting a property has low set up costs – even greater if you look at the many deposit-free options now available.

Don’t let estate agent & legal fees eat into your equity

As our blog on buying and selling fees explains, moving home could leave you thousands of pounds out of pocket. When you sell to Open Property, there are no estate agent fees to pay, no EPC to budget for and no legal fees either, meaning you get to keep more of your money.

Need cash quickly?

If you need a cash injection, ask us about a cash advance prior to exchanging contracts, in addition to a lump sum when contracts are exchanged. We can buy, complete and pay out on your property in seven days or less, with cash transferred direct to your bank account.

Contact us

If you need to access cash tied up in your property within a matter of days, please speak to Open Property. Get in touch today.

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