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Selling your home and moving into a smaller one does have a lot of benefits because you can reduce your mortgage and cut the running costs associated with owning a home. All of that extra money could be put into debt payments if you have consumer debt balances, so you can secure your finances.
However, selling your home and downsizing is a big decision to make and it’s not always the right call. If you are thinking about downsizing your home, here are a few things you should consider first.
Have You Exhausted All Other Options?
When you are cutting your budget, are you really ruthless with it or are you still paying for luxuries that could be cut out? Stripping your budget back as far as possible is always the first thing you should try. If you can cut your budget and use the debt snowball method to clear your debts, you may not need to downsize.
You should also look into things like debt consolidation loans and see if you can set up a payment plan with lenders to take the pressure off. If none of these things work, only then should you consider downsizing your home.
How Long Will The Sale Take?
If you have lenders calling you up on a daily basis and sending you final demands, you need to do something fast. The thing is, selling a house is not usually a quick process so, even if you get a good price for it, will it be too late to sort your debt issues? You can use house buying services like we buy any house to sell your home for cash straight away, but it’s important that you consider the property market. You might be able to get a quick sale, but if you lose money on the house then this could do more damage to your finances because you no longer have your biggest asset.
How Will It Impact Your Family?
It’s not just the financial side of things that you need to consider, you also need to think about how downsizing will affect your family. If you have older kids, for example, will they be happy about having to share a room? Kids need their own space and downsizing could put a lot of pressure on the family, so think carefully before you make any moves. Moving to a different area can also cause some disruption for children if they have to change schools and leave their friends behind. It’s important to consider whether the impact on your family is really worth it.
In some cases, selling your home and downsizing is an effective way to manage your debt issues. However, you need to consider all of these aspects before you make your decision.