Downsizing 'can be very difficult'

Downsizing as a way to raise equity to qualify cheap mortgages is far more difficult than many people think, it has been claimed.

David Wright, managing director at Sixty Plus, said that there are a number of pitfalls associated with selling up to get a cash injection that many people do not consider.

He explained that people build up an emotional attachment to their home and many find moving incredibly stressful.

Add to that the fact that buying a new house can be incredibly expensive, even if someone is downsizing, so there may be better options for some people seeking cheap mortgages.

"It is fine if somebody is on their own in a four or five-bedroom house and can easily downsize and release plenty of money, but people in a three-bedroom semi will find that the difference between the value of their three-bedroom semi and a smaller house or a flat is far less than they would expect," Mr Wright warned.

Investec Wealth & Investment reported that 4.7 million homeowners are looking to downsize over the next five years, but they could be overestimating the amount of equity they will release by an average of £22,000 each.

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2011-09-20 13:57:56 © Moneyextra.com