Home ownership on retirement: Selling your home?

Staying in your home after retirement or selling it? We show you what you should consider before selling your home and what options you have. 

Retirement is a big step for many. The day-to-day work is over, but there’s more time for (new) hobbies, for the family, for travel, the garden, the big project that you’ve always wanted to tackle. At the same time, retirement raises new questions: Where and how do I want to live in the future? Is the home too big for two people? Should we give the house to the children? 

Not an easy decision. And once you’ve decided to move, the next big question awaits you: “What do you do with your current home? Sell and buy a new one? Rent it out, gift or bequeath it?” 

Selling a house in retirement – is it worth it?

Selling their home is a major change in the lives of many retirees – after all, your home is usually associated with many memories. At a time when a lot is already changing, you want to stick to something that gives you security. And yet a new home is perhaps more practical, better located, more modern. Or you can make a long-held dream come true with the profit from the sale – a trip around the world or a vacation home by the sea. The situation is different if home ownership is no longer affordable in your old age. You can find all the information you need in our article on the affordability of residential property after retirement. 

Regardless of the reasons why you’re considering selling your house or apartment after retirement, it’s definitely worthwhile getting comprehensive advice from your bank or insurance company. Once all the questions relating to the mortgage situation, affordability, the sale and, if necessary, the financing of new residential property have been clarified, the decision is that much easier. 

Enjoying your golden years: Your options 

Selling your residential property and buying a new apartment is not the only option available to you. Owners of residential property have the following options:

• continue to live in your own house or condominium, if you can still afford it: Here, it is important to calculate precisely whether your current home will still be affordable after retirement – and whether the property still meets your own needs.
• sell, bequeath, gift or rent your home and buy a new one: You should think about whether you can afford a new home, interim financing and, in the case of a gift or an inheritance advance, possible financial compensation to other children, as well as the impact on one’s own financial planning.
• sell you current home and rent a home in the future: Any proceeds from the sale should be invested sensibly.

Selling a house to then buy a new home – not so easy

If you currently own your own home and intend to sell it, you have to decide whether to buy a new home for the third phase of your life or spend it in a rented apartment. Anyone who decides to buy a new home should be aware that this usually involves a double financial burden – albeit only temporarily. After all, it’s not always easy to sell your current home and at the same time that you buy a new one and then move directly from your existing home to your new dream property.

Interim financing can therefore be worthwhile, with the bank granting another mortgage until the old property is sold. This means that funds are available to pay for the new property while the sale of the current property has not yet been completed. As soon as the funds are released from the sale, we will repay this mortgage. 

Instead of selling, why not gift or bequeath?

Not everyone wants to sell their home. Often, people want their home to remain in the family – be be passed on to the next generation or bequeathed. This is not an easy matter. Especially not if several children stand to inherit and are entitled to financial compensation. In our article on the subject of Inheritance, we have summarized the most important information. 

However, a gift or advance on the inheritance of residential property not only means a payment to the other children, but also means that the parents who are moving out lose the profit from the sale of the house – an amount that could be needed in old age. 

So if you gift your home or bequeath it while you’re still alive and move into a new apartment or house, it’s particularly good to be clear about your own budget and the cost of living after you retire. This is because possible costs for stays in retirement homes and nursing homes can put additional strain on your budget. 

Selling a house, renting an apartment – and what happens to the profit?

It is not uncommon for former homeowners to become new tenants after they retire. They sell, gift or bequeath the property and move into a new rental apartment. Even then, accurate financial planning is important. If rent is higher than previous home ownership costs, the budget must be adjusted accordingly.

On the other hand, the question arises as to how to deal with the proceeds from the sale of the house. After all, this usually results in a considerable amount that shouldn’t just remain in your savings account. It is important to invest the proceeds in such a way that they can cover ongoing costs, if necessary, or be used for unforeseen expenses. Depending on your age when you sell residential property, the money from the proceeds should also be invested in the short to medium term rather than the long term. So it is available when it is needed.