Beginner's guide to downsizing your home in Roma

Downsizing in Roma means you're often buying with cash or a much smaller loan amount

Most people downsizing in Roma already own their home outright or have substantial equity. The question becomes whether to buy the next property with cash or keep some of that equity working elsewhere. A couple selling a four-bedroom home on acreage might walk away with $450,000 to $550,000, then purchase a low-maintenance home closer to McDowall Street for $300,000 to $350,000. That leaves a meaningful amount of capital that could sit in an offset account, stay invested, or fund other priorities like helping family or setting up income streams.

If you're planning to carry a small loan rather than paying cash, lenders still assess your income. Age Pension income is accepted, as is rental income from investment properties or income from super in some cases. The loan amount matters too. Borrow $150,000 at current variable rates and your repayments sit around $900 to $1,000 a month depending on the lender and your deposit size. That's manageable on most retirement incomes, but you'll need to show serviceability.

Should you take out a loan when you could pay cash?

You should consider a loan if keeping capital liquid gives you more flexibility or if the funds are earning a return elsewhere. In a scenario like this, a retiree sells a larger home and has $200,000 left after purchasing the downsize property. They could pay that $200,000 straight into the loan and own the home outright, or they could take a $200,000 loan and link an offset account to it. The cash sits in the offset, reducing interest to near zero, but remains accessible for medical expenses, travel, or helping adult children without needing to redraw or refinance.

Some lenders allow unlimited redraws on variable loans, but others restrict access once you're retired or no longer working full-time. An offset account doesn't have that problem. The money is yours, sitting in a transaction account, and you can move it whenever needed. The loan sits alongside it, accruing almost no interest as long as the offset balance matches the loan balance.

Fixed or variable rate when you're downsizing?

Variable rate loans give you the flexibility to make extra repayments or pay the loan out early without penalty. If you're downsizing and there's a chance you'll sell again in a few years, move into aged care, or receive an inheritance, a variable rate lets you repay the loan in full at any time. Fixed rates lock you in for one to five years, and breaking that fixed period early often triggers break costs that can run into thousands of dollars depending on rate movements.

In our experience, most downsizers in Roma go variable because they value access and flexibility over rate certainty. Retirement brings unpredictability around health, family needs, and spending, so keeping the loan structure flexible makes more sense than shaving a fraction off the interest rate.

How lenders assess your application when you're retired or semi-retired

Lenders assess your income and expenses just like any other application, but the income types change. Age Pension counts as income, though some lenders apply a loading or reduction depending on their policy. Rental income from an investment property is assessed at 80% of the actual rent in most cases. Income from superannuation, either as an account-based pension or annuity, is also accepted by most lenders, though they'll want to see statements showing regular drawings and the balance remaining in the fund.

Consider a buyer who receives $38,000 a year from the Age Pension and draws another $15,000 annually from super. That's $53,000 in assessable income, which is enough to service a loan of $150,000 to $200,000 depending on other commitments and living expenses. If you own an investment property bringing in $18,000 a year in rent, the lender will typically assess around $14,400 of that as income. Your total expenses matter too. If you're still paying off a car loan or supporting adult children, that reduces your borrowing capacity.

Loan features that matter when you're downsizing

You want a loan that lets you repay early, redraw if needed, and doesn't penalise you for paying it out in full. An offset account is worth having even if you don't think you'll use it immediately. It keeps your options open without costing extra in most cases. Some lenders charge a monthly offset fee, but many don't, and the flexibility is worth checking.

Portability is another feature to consider. If you think you might move again within a few years, a portable loan lets you transfer the existing loan to a new property without reapplying or paying discharge fees. Not all lenders offer this, and some have conditions around timing and loan amount, but it's a useful feature if your plans aren't locked in.

Avoid interest-only loans unless there's a specific tax or investment reason. You're not building equity, and most retirees want the loan balance reducing over time rather than sitting static. Principal and interest repayments give you a clear end date and reduce what you owe with every payment.

What downsizing looks like in Roma

Roma's housing stock includes older Queenslanders, brick homes from the 70s and 80s, and newer builds on smaller blocks. Most downsizers move from rural residential blocks or larger homes with yards into something more manageable near the hospital, Bungil Street, or the western edge of town where newer estates have been developed. The appeal is less maintenance, lower rates, and being closer to services as mobility becomes a consideration.

Property values in Roma have held relatively steady over the past few years, supported by agriculture, gas industry workers, and retirees staying in the region. That stability makes it easier to plan a downsize without worrying about sharp market swings. If you're selling and buying in the same market, you're insulated from most price movements because both sides of the transaction move together.

How to structure the loan if you're helping family at the same time

You might be downsizing and also helping an adult child with a deposit or paying for grandchildren's education. If that's the case, think through the timing and how much you'll need to keep accessible. Taking a slightly larger loan and keeping $50,000 or $100,000 in an offset gives you the option to move money to family when needed without having to sell investments or withdraw from super at an inconvenient time.

Some parents go guarantor for their children instead, using equity in the downsized home to support the next generation's home loan application. That's a separate conversation and comes with different risks, but it's worth knowing the option exists if you're downsizing into a property with equity and want to help without handing over cash.

When to start the loan application process

Start talking to a broker before you list your current home. That way you know what you can borrow, what income the lender will accept, and whether there are any issues to sort out before you're under contract. Pre-approval gives you certainty and lets you move quickly when you find the right property. In a town like Roma, stock doesn't sit around long if it's well-priced and low-maintenance, so having your finance sorted means you're ready to make an offer.

The application itself takes a few weeks once you've submitted all documents. Lenders want to see proof of income, bank statements, and details of the property you're purchasing. If you're selling and buying at the same time, they'll want a contract of sale for the property you're leaving and a contract of purchase for the one you're buying. Settlement timing matters too. If there's a gap between selling and buying, you might need bridging finance or short-term accommodation, so talk through the timing early.

Call one of our team or book an appointment at a time that works for you.

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