A third of families considering moving to save money: Downsizing, moving and living with others are on the cards, says mortgage giant Halifax
- About 17% have considered moving to a smaller home in order to cut costs
- But many (60%) said they would not rule it out if circumstances changed
- Moving to a smaller one-bedroom house will raise an average of £120,820
- Transportation cost has been cited as the main drawback to downsizing
- Rent and mortgage costs have risen in recent months
New research from Halifax reveals that nearly a third of families are considering changing their living arrangements in order to help cope with the cost of living crisis.
The bank, one of the UK’s largest mortgage lenders, said its survey found that three in 10 people asked (30 per cent) had already considered options such as downsizing, moving or cohabiting.
Almost one in five (17 per cent) say they have considered downsizing in order to help with rising costs.
Those living in central London were most likely to consider moving or downsizing to cut costs, with 32 per cent saying they had considered both, respectively.
Downsizing your home to a 1 bedroom could unlock over £100,000 in cash from a property
Of those surveyed, nearly two-thirds (60 percent) said moving to a smaller home to help with living costs would be something they might consider if necessary, and they wouldn’t rule it out.
‘With so many people looking at options to take their money further and make the most of the assets they have, moving into a smaller home is something many people might consider,’ said Kim Kinnaird, Halifax Mortgage Director.
For those who are an option, downsizing can lower mortgage costs that can help with the cost of living or unlock significant equity for a financial stock.
But it is not without its own challenges. The time it can take to move home, the distance from friends and family, and the limited space can all put a question mark on whether moving to a smaller home can work.
When considering downsizing, 72 percent said saving money was one of the benefits, with a third (33 percent) listing it as the number one benefit.
Based on a Halifax House Price Analysis of homes of various sizes, moving into a smaller one-bedroom home would raise an average of £120,820.
Money can be saved in all areas of the UK by downsizing with a 1 bedroom, the largest being between 5, 4, 4 and 3 bedroom. On average, the monthly mortgage saving could be £935 or £809 respectively.
However, there are drawbacks to downsizing. Moving costs have often been cited as one of the main negatives of moving to a smaller property (39 percent of people put this in their top 3 negatives).
Mortgage rates have risen sharply in the past few months adding to the financial problems
Being away from family and friends (29 percent) and being in an unfamiliar area (28 percent) also posed high-level concerns about making the move.
Over the past few months, mortgage costs have risen and rents have also risen to record levels across the UK.
Property rent averaged £1,204 a month, according to Hamptons estate agents with tenant households now typically spend 44 per cent of their after-tax income on rent.
Before the Friday, Sept. 23 mini budget, the average two-year fixed interest rate across all loan-to-value categories was 4.74 percent, and the five-year fix was 4.75 percent, according to Moneyfacts.
The rates now stand at 6.28 percent and 6.07 percent respectively, having both fallen since the base rate announcement on November 3. This is in addition to the deteriorating economic environment.
New CPI inflation data is due to be released this week, and it is expected to exceed its current level of 10.1 percent.
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