Hidden Costs of Downsizing in Victoria: What Mornington Peninsula Homeowners Need to Budget For

If you are thinking about downsizing, you have probably already done some fairly simple maths.

What could we sell our current home for?

How much will our next home cost?

And how much should we have left afterwards?

It sounds straightforward.

Unfortunately, that calculation can leave out quite a few things.

After sitting across the table from many people who have downsized, I have noticed that the same conversation happens again and again.

It is usually not the selling price or the agent's commission that catches people by surprise. Those are the obvious figures.

Instead, it is something they didn't know to ask about.

Perhaps it is an owners corporation expense they weren't expecting.

A cost connected with buying their new home.

A removalist bill that ended up being quite different from the original estimate.

Or the simple fact that selling one home and moving seamlessly into another doesn't always happen as neatly as we would like.

These are the hidden costs of downsizing.

They don't necessarily mean downsizing is a bad financial decision.

Far from it.

But they can make the difference between a move that feels carefully planned and one where you find yourself repeatedly dipping into savings for expenses you hadn't expected.

In the video embedded on this page, What Downsizers Wish They Knew Before They Moved, I explain five costs that I regularly see catch homeowners by surprise.

I'm not going to give you every detail here.

Instead, I want to highlight some of the questions you should be asking — and then I encourage you to watch the video before you finalise your downsizing budget.

What Does Downsizing Cost on the Mornington Peninsula?

This is probably the wrong question to answer with one figure.

Every move is different.

If you sell a large family home in Mornington and purchase a smaller villa nearby, your costs will look quite different from someone selling in Mount Eliza and buying an apartment in Mornington.

Similarly, a person moving directly from one property to another is in a very different position from someone who needs temporary accommodation or storage between properties.

That is why I think it is much more useful to ask:

What will downsizing cost us from beginning to end?

That means looking beyond just:

Sale price minus purchase price.

Think about the entire journey:

Selling your current home.

Buying your next property.

Moving between the two.

And then making the new home actually work for you.

Those last two areas are particularly easy to underestimate.

Before you decide how much you can comfortably spend on your next property, it is worth calculating what you would like to have left after the entire move is finished, rather than simply after settlement.

That can give you a much more realistic budget.

Buying a Unit or Townhouse When Downsizing? What Will It Really Cost?

One of the most popular choices for people downsizing on the Mornington Peninsula is moving from a freestanding family home into a unit, villa, townhouse or apartment.

There are obvious attractions.

Less garden.

Less exterior maintenance.

Potentially a smaller and more manageable floorplan.

Possibly a location that allows you to walk to shops, cafés or services rather than relying on the car as much.

But there is an important financial change that is easy to overlook.

For decades, you may have controlled almost every maintenance decision relating to your home.

If the fence needed replacing, you chose when to do it.

If the house needed painting, you decided whether this year or next year suited your budget.

Move into an owners corporation and that arrangement can change.

There may be regular owners corporation fees and expenses relating to common property.

But even knowing the quarterly fee doesn't necessarily tell you the whole financial story.

There is another question I would want answered before buying.

What expenses might be coming?

That is where doing your homework becomes very important.

There are particular documents I recommend downsizers look at before committing to this type of property, because they can provide clues about future maintenance and expenditure.

I explain what to look for — and why it matters — in the embedded video.

Watch the video before signing a contract on a unit, townhouse or apartment, particularly if you have never previously owned within an owners corporation.

What Costs Do You Pay When Buying a Downsized Home in Victoria?

Sometimes people are so focused on selling their family home that they forget they are also becoming a buyer again.

That can be a strange feeling when you haven't purchased a property for 20, 30 or even 40 years.

And quite a lot may have changed since you last bought.

You may have calculated:

“If we sell for this amount and buy for that amount, this is what we'll have left.”

But there are costs attached to the purchase as well.

One of the significant ones can be Victorian land transfer duty — more commonly referred to as stamp duty.

Depending on your individual circumstances and the property you purchase, concessions may also need to be investigated rather than assumed.

This is where I strongly recommend getting specific professional advice about your own position before signing a contract.

The important point from a downsizing perspective is this:

Don't base your next-home budget solely on the difference between two property prices.

Know your likely purchasing costs as well.

A difference of several thousand dollars can matter when that money was intended to supplement retirement savings, provide a future financial buffer or simply give you greater freedom after the move.

In the video, I explain why this particular expense has produced some uncomfortable surprises for downsizers I've spoken with.

Why Can Removalist Costs Be Higher Than Expected When Downsizing?

Removalists are something almost everybody remembers to put into their downsizing budget.

So why are they on a list of costs that catch people out?

Because there can be quite a difference between:

“We've allowed for the removalist.”

and

“We know what our move is actually going to cost.”

If you have lived in your home for decades, you may have considerably more belongings than someone who moves every few years.

Even after decluttering, there can still be furniture, boxes, tools, garage contents, artwork, outdoor furniture and items tucked away in places you have almost forgotten about.

Then there is access.

Can the truck get close to your current home?

What about the new property?

Are there stairs?

A lift?

Restricted parking?

Furniture that needs to be dismantled?

Particular access times?

These details can affect the complexity of the move.

This is why I talk in the video about a simple step I would take when obtaining removalist quotes.

It can give you a much better idea of what the move actually involves before moving day arrives.

If you're starting to sort through decades of belongings, you may also find our other downsizing resources helpful. Visit the McNeill Real Estate YouTube channel for practical videos covering the different stages of preparing for a move.

What Happens If You Sell Your Home Before Your New Home Is Ready?

This is one of the most important parts of a downsizing budget — and perhaps one of the least discussed.

We would all love this scenario:

Your family home settles in the morning.

Your new home settles shortly afterwards.

The removalist arrives.

Everything moves neatly from Property A into Property B.

No gaps.

No temporary arrangements.

No double handling.

Real life doesn't always cooperate.

You might find the perfect downsized home before your existing property has sold.

Perhaps the buyer of your home needs a particular settlement period.

The seller of the property you're purchasing may want something completely different.

You may even deliberately decide to sell first so you know exactly how much you have available to spend.

All perfectly reasonable scenarios.

But what happens in between?

That is where additional downsizing costs can begin appearing.

There may be financial costs.

There may be storage.

There may be accommodation.

There may even be additional moving expenses.

A relatively short gap between two properties can become surprisingly expensive when several of these things happen at once.

Rather than assuming your settlements will align perfectly, consider asking:

If there is a gap between our sale and purchase, what is our Plan B?

And importantly:

How much would Plan B cost?

Simply asking those questions early can make the situation much less stressful if your ideal timeline doesn't eventuate.

I go into this in considerably more detail in the video, including the type of buffer I believe downsizers should at least consider when planning their move.

Downsizing to a Smaller Home Doesn't Always Mean You Stop Spending

You've sold.

You've bought.

You've moved in.

Surely that's the end of the spending?

Not always.

There is one final category I regularly see underestimated.

Setting up the new home.

You have probably spent years — possibly decades — making your current home work for you.

The curtains fit the windows.

The furniture fits the rooms.

The garage and shed have all your storage.

The garden has evolved over years.

Everything has a place.

Then you move.

Suddenly, the furniture that looked perfectly proportioned in your large family living room feels enormous.

Your dining table may not work in the new space.

The window coverings are different.

Perhaps you no longer have a shed and need another storage solution.

You haven't done anything wrong.

This is simply part of moving from a property you have adapted over decades into a different type of home.

However, these purchases can become a problem when they were never included in the budget.

A few hundred dollars here.

Another purchase there.

Something else next weekend.

It is surprisingly easy for those amounts to accumulate.

That doesn't mean you need to furnish an entirely new home before you move.

Quite the opposite.

It means recognising that there is likely to be some expenditure after settlement and keeping money available for it.

How Much Money Should You Keep Aside When Downsizing?

There isn't one number that will suit everybody.

What matters is having more than just a sale price and purchase price written on a piece of paper.

When helping someone think through a move, I would rather see a budget with realistic allowances than one where every available dollar is allocated to purchasing the new property.

Your next chapter should ideally give you greater freedom — not leave you worrying about every unexpected invoice that arrives afterwards.

Think about the unknowns.

What if the settlements don't align?

What if moving costs more than anticipated?

What if the new home needs a few things before it feels comfortable and functional?

What if your owners corporation has expenses you hadn't considered?

A buffer provides choices.

And having choices is particularly important when you're making a move that may be intended to suit you for many years to come.

Planning to Downsize on the Mornington Peninsula? Start Before You Sell

One of the most common misconceptions about downsizing is that planning begins when the For Sale board goes up.

Ideally, it begins much earlier.

The earlier you begin thinking about the move, the more time you have to understand:

• What your current property may realistically sell for.

• What suitable replacement properties are likely to cost.

• The costs involved in selling and purchasing.

• Your preferred settlement strategy.

• What type of property will work for you long term.

• How much money you would like remaining once the entire move is complete.

You don't need to have decided to sell.

You don't even need to know exactly where you're moving.

Sometimes the first step is simply understanding what your options actually look like.

If you're still deciding whether now is the right time, you may also like to read How to Know When It's Time to Downsize Your Home on the Mornington Peninsula.

It looks at the practical signs that your current home may no longer be supporting the lifestyle you want — even if you still love living there.

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Watch: What Downsizers Wish They Knew Before They Moved

If you are budgeting for a move, watch the video embedded below before you decide how much you can afford to spend on your next home.

I cover five costs that repeatedly come up in conversations with downsizers, including some that are particularly easy to overlook until you're already committed.

Watch What Downsizers Wish They Knew Before They Moved on YouTube

The aim isn't to frighten you with more expenses.

It's to help you see them coming.

Because a cost you know about can be planned for.

A cost you discover after signing a contract is much harder to manage.

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Free Downsizing Guide for Mornington Peninsula Homeowners

If you are starting to think about selling the family home — whether that's this year or still some time away — we've created a free 49-page Downsizers Home Selling Guide to help you plan ahead.

It covers the practical steps involved in preparing for a move, along with useful checklists, worksheets and questions to consider before you sell.

You don't need to be ready to put your home on the market.

In fact, the guide is particularly useful while you're still in the planning stage.

Download your free Downsizers Home Selling Guide, or contact McNeill Real Estate for a confidential conversation about what downsizing could look like for you.

There is no pressure to sell.

Sometimes getting the right information is all you need to work out your next step.

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About the Author – Janet McNeill

Janet McNeill is a Licensed Estate Agent and Director of McNeill Real Estate, an independent boutique real estate agency based on the Mornington Peninsula in Victoria.

Janet works with homeowners across Mornington, Mount Martha, Mount Eliza, Rosebud, Safety Beach, Dromana, Frankston South and the wider Mornington Peninsula, with a particular focus on helping older homeowners and their families navigate the practical and often emotional process of selling a long-held family home.

McNeill Real Estate provides residential sales and property management services, along with practical guidance for homeowners considering downsizing on the Mornington Peninsula, selling for retirement, moving into a lower-maintenance home or preparing a family property for sale.

If you are wondering what your home may be worth, what you could buy next, or simply where to start, contact Janet McNeill at McNeill Real Estate for a confidential discussion about your options.

McNeill Real Estate – Mornington Peninsula Real Estate and Downsizing Specialists.

 

Disclaimer: The contents of this blog do not constitute financial, taxation, Centrelink or legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. You should seek legal advice or other professional advice in relation to any particular matters you or your organisation may have.. David and Janet encourage homeowners to seek appropriately qualified advice before making financial decisions and works alongside their chosen advisers to help coordinate the property component of the move.

 

If you are considering downsizing on the Mornington Peninsula, taking the time to understand the financial side of the move can help you make more informed decisions before you put your home on the market.