According to a new research by the Loan Market Group, an increasing number of homeowners are downsizing to a smaller home in an effort to reduce their mortgage debt.Having a large debt for your home is a luxury that few can afford.
Loan Market chief operating officer Dean Rushton said the majority of downsizers are aging baby boomers getting ready for retirement. but many home owners who are younger simply do not have the capital to sustain their current lifestyle so they need to reduce debt by selling up and moving to a smaller property.
“We have had a recent case from one of our brokers who had retiree clients on Sydney’s North Shore who have sold their home for $900,000 and bought another place for $650,000,” he said.
Such refinance activity is very common now as a large sector of the Australian population is getting older and is preparing to retire.
Mr Rushton said empty nesters were also downsizing to help their children get into the real estate market.
“These clients may sell the long standing family home and buy a smaller property, which gives them money to start preparing for retirement and also some spare cash if they want to assist their children in buying their first property,” he said.