Why older homeowners are rethinking downsizing

Downsizing used to be the default retirement plan. But for today’s older borrowers, selling the family home isn’t so simple, or so appealing. Increasingly, advisers are seeing later-life clients choosing to stay put, and seeking new financial options to make that possible.

“People don’t want to move,” said Tim Spencer, managing director at Optimus Mortgages who works extensively with older clients. “They’re not houses; they’re homes. That distinction is everything.”

It’s not just bricks and mortar

Spencer believes that professionals in the mortgage industry sometimes forget how deeply personal homeownership is, particularly in later life.

“You’ve got memories. Routines. Neighbours – whether you like them or not,” he said. The suggestion to ‘just downsize’ often ignores what the home really means.

He points to the social fabric built over decades – relationships with shopkeepers, local communities, familiar routines – all of which can be hard to leave behind. “Telling someone to move on because it makes financial sense misses the emotional complexity.”

He also notes that the financial case for downsizing often doesn’t stack up. One couple he worked with considered selling their four-bed family home. But once they factored in the cost of buying a smaller property – often of lower build quality – and moving fees, there was no clear benefit. “They’d be selling for £400,000 and buying for £400,000. What's the point?”

And then there’s the logistics. Spencer recently moved house himself and found the process exhausting – despite having two incomes and the flexibility to move gradually. “Try doing that at 75,” he said. “It’s a massive upheaval.”

Lending is evolving to meet emotional and financial needs

For clients determined to stay in their homes, new lending solutions are helping make that possible. Spencer points to the evolution of lifetime mortgages and retirement interest-only (RIO) products as key developments.

“Lifetime mortgages aren’t the last resort anymore,” he said. “They’re more like grown-up mortgages now. You can make payments if you want to, or not. That flexibility just wasn’t there before.”

The key, he said, is asking the right questions, about income, health, lifestyle and emotional readiness, rather than defaulting to any one product. He favours a holistic, human-led approach, beginning with a client wellbeing questionnaire and followed by unhurried, informal meetings.

“I don’t rock up in a sharp suit. I go round with a pen and paper and have a proper chat,” he said. “It’s not hard sell. It’s about listening.”

He regularly asks clients if they’ve considered moving. “Ninety-nine times out of 100 they say absolutely not. They’re settled. They like their neighbours. They’ve been there 30, 40, 50 years.”

Still, he resists assumptions. One client, a widow in Bournemouth, surprised him by embracing the idea of taking in a lodger. “She said, ‘That’s a really good idea. I didn’t know I could do that.’ It gave her company, peace of mind, and a little income. You can’t generalise.”

More options, better understanding

Spencer believes product innovation in the later-life lending market has opened doors, but that industry and public understanding haven’t kept pace.

“There’s still this lingering fear of equity release. People think it’s like it was 20 years ago,” he said. “But those days are gone. The no-negative-equity guarantee, the regulatory safeguards – it’s a different landscape now.”

That fear, he adds, is often based on outdated stories or media coverage. Educating clients about the new generation of flexible products is critical, especially as people take out mortgages later in life and retire later, too.

“If you get a first-time buyer at 35 on a 35-year mortgage, they’re 70 by the time it ends. That’s later-life lending,” he said. “And yet we still act like 55 is some hard cutoff. It’s not. It’s just a new starting point.”

He often hears people say they don’t like equity release – until they learn what today’s lifetime mortgages really offer. “It’s about how you position it. When clients understand they can make overpayments, that their family won’t be left with debt, that there are protections in place, they start to see it differently.”

Emotional realities, lived experience

Spencer doesn’t shy away from difficult conversations about illness, death, or affordability. “It’s not sexy to talk about death and inheritance, but it’s necessary,” he said.

He’s speaking from experience. “I’m going through it myself with my brother’s estate – and it’s a nightmare,” he said. “Do you understand what it actually means to leave a big house full of stuff to someone 300 miles away? Because I do.”

The logistical and emotional burden of inheritance, especially when family members live far apart, is something clients often overlook until it becomes overwhelming. Spencer, who has urged his own parents to set up lasting powers of attorney, says many people are navigating both ends of responsibility at once.

It’s the sandwich generation: “You’re looking after your kids and your parents at the same time, and no one prepares you for that,” he said.

As borrower needs evolve and emotional ties to home grow stronger, the shape of retirement planning is shifting. For advisers, the challenge is no longer helping clients move on, it’s helping them stay put, with dignity, flexibility, and financial clarity.