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Home ownership in old age: what to do with your beloved property?

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For many people, home ownership is a key investment in their lives and is more than just a house or apartment. It is a place of memories, of years spent together with your partner, of your children growing up. But what to do when the children have left home and retirement is just around the corner? Should the property be sold, rented out or remain owner-occupied? This article examines the various aspects of the options.


Financial provision for retirement: focus on property and mortgage


Buying a home is a milestone in many people’s lives. At the same time, buying a property is an investment in both the present and the future. As the mortgage is paid off, the assets increase and the financial burden decreases. In today’s market, home ownership offers a stable and secure home. In addition, real estate is regarded as a solid retirement provision that can increase in value over the years.

For many, the question of financial security comes to the fore as retirement approaches. Is the statutory pension sufficient to maintain the standard of living I am used to? How does the mortgage affect your finances in old age? What happens if unexpected costs arise?

Inflation - Annual average of the overall index

Retirees’ income is falling, while the costs of housing, health and leisure often rise. It is therefore important to plan your financial situation in advance. One way to generate additional capital is to increase the mortgage. Although this can make financing easier, it also means higher interest rates. However, this can increase the financial burden in old age and must therefore be carefully weighed up.

In addition to the mortgage, the ancillary costs for the property should also be factored into retirement planning. This includes, for example, costs for maintenance, repairs, heating and electricity.

The various options and their advantages and disadvantages are outlined below.


Selling your home in old age can have various advantages and disadvantages


Liquidity: The sale of the property generates a large amount of capital that can be used to finance your standard of living in retirement. This can be used to finance travel, hobbies or care in old age, for example.

Repayment of debts: The proceeds from the sale can be used to pay off existing debts, such as a mortgage. This can significantly improve your financial situation in retirement and reduce your monthly expenses.

Flexibility: Selling your own home allows you to move into a new, barrier-free apartment or retirement home. This may become necessary if your own home no longer meets your needs in old age or if care in your own home is no longer possible. In a senior citizens’ housing estate, residents live surrounded by like-minded people and benefit from an infrastructure that meets their needs. Communal lounges and leisure activities encourage social contact, while domestic help, medical care and nursing support independence.


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Emotional attachment: Selling your home can be emotionally stressful, as it is often associated with memories and personal experiences. Leaving the familiar living environment and saying goodbye to familiar neighbors and friends can be difficult.

Uncertainty: There is a risk that the sales price will be lower than expected. There can be various reasons for this, such as an unfavorable market situation or a need to renovate the house. In the worst-case scenario, this can lead to a financial loss.

Chart on the price trend for owner-occupied homes in Switzerland as a whole

Renting out your home in old age can have various advantages and disadvantages


Additional income: Rental income can be an additional source of income in retirement and supplement your pension. This can increase financial security in old age and improve your standard of living.

Value retention: The property can increase in value over time, which can lead to a higher price in the event of a later sale. This can improve retirement provision and leave the heirs with greater assets.

Control: The owner retains control of the property and can decide who lives in it. This can be an important factor compared to selling your own home if you feel emotionally attached to the property or plan to use it yourself again later.

Effort: Letting can be time-consuming. Tasks such as searching for tenants, organizing viewing appointments, drawing up tenancy agreements, processing incoming rent and maintaining the property must be taken on. This can be a burden, especially in old age.

Loss of rent: There is a risk of loss of rent if the property is vacant or the tenants do not pay their rent. This can lead to financial losses.

Damage: Tenants can damage the property, which can lead to high repair costs.

Unpredictability: If the property suddenly has to be sold for unforeseen reasons, it is not always possible to achieve the desired value.


Decision support: selling or renting a property


Deciding whether to sell or let a property is an important and complex decision that depends on a number of factors.

Personal situation: How long would you like to live in the property? Do you need more or less space? Would you like to take care of the maintenance or would you prefer a carefree income?

Financial situation: Do you need capital for other purposes? Can you count on sufficient rental income? Are the running costs affordable?

Taxation: Do you benefit from tax advantages? How high will the property gains tax be on the sale? How high is the tax burden on rental income?


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Real estate market: Is the demand for real estate in your region high? What is the current market value of your property? How will the market develop over the next few years?
Also consider your needs and preferences.


Conclusion


Owning a home in old age can be a challenge, but also an opportunity. The decision as to whether to sell, rent out or continue to live in your home in old age is an individual decision and depends on various factors. There is no single solution, as each option has advantages and disadvantages.
Regardless of the decision, it is important to prepare for the coming years. Where possible, this can mean making the property barrier-free, securing financing or thinking about alternative housing options.

It is important to weigh up all the options carefully and not make any hasty decisions. Depending on the situation and the scope of the decision, it may be beneficial to consult an expert.



All data are without guarantee. The information on these Internet pages has been carefully researched. Nevertheless, no liability can be assumed for the accuracy of the information provided.

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