Buying a House in Cash

10 May 2022

There are many benefits that come with buying a home in cash, but also some major considerations as well.

 

In this article, we’ll explain: 

 

 

What is a cash buyer?

 

A cash buyer is someone who buys a home without the need for a mortgage or selling another property to fund the purchase.

 

It’s a common misconception that a cash buyer is only someone who doesn’t require a mortgage, but this isn’t the case.

 

If you need to sell a property to fund your new purchase, even if you don’t require a mortgage, you will not be considered a ‘cash buyer’.

 

Can you buy a house with cash?

 

Of course, it is possible to buy a house with cash, this means you won’t require a mortgage to fund it the purchase.

 

Being a cash buyer can be beneficial for you and your seller, but there are things to consider before deciding whether to cash buy or obtain a mortgage.

 

Is it better to cash buy when buying a home?

 

There are several pros and cons that come with being a cash buyer, here are some we think are important to take into consideration.

 

Pro #1: You will be viewed as a more reliable buyer

 

When buying a property in cash you don’t require a mortgage and you aren’t relying on the sale of an existing property to fund your new purchase. Therefore, there is far less that can go wrong and the potential for a collapsed chain is reduced greatly.

 

This is hugely attractive for the seller of the property and puts you in a strong position when negotiating the purchase price.

 

Pro #2: Less stress

 

Moving home at any time is never straightforward, however, there’s much less complexity if you’re a cash buyer which results in less stress for both yourself and the seller.

 

Pro #3: Quicker purchase process

 

Getting a mortgage approved takes time, however when you buy in cash you’re cutting this part out of the purchase out. This means buying your house takes less time and is a smoother transaction. 

 

Con #1: Your liquid cash is tied up in your property

 

When buying in cash, you’re committing a huge amount of your money into one asset. This means, if you require a lump sum of money in the future, selling your home or remortgaging may be the only option and these things can take time.

 

Con #2: Limited leverage

 

When you buy a house with a mortgage, you can leverage your loan to get a better return on investment in a rising property market. Leverage also works the other way too though, which means you have the potential to lose more when buying with a mortgage compared with cash if the market does fall.

 

Con #3: Other investment options are limited

 

If you choose to tie up all your cash in buying a property, it’s more than likely you will have little left to make other investments and diversify where your money is invested, potentially reducing risk.

 

How to buy a home with cash

 

The process of buying a house with cash is very similar to buying with a mortgage.

 

However, as you aren’t using a mortgage loan, you will be removing a major part of the home buying process – which makes the process much simpler and potentially faster.

 

The process to expect when buying with cash is:

 

 

What documents you need for buying a house with cash

 

The seller’s estate agent will ask to see proof of your funds to buy the property, this can be shown in a bank statement.

 

They may also ask to see the source of your funds under money laundering rules, so you may need to show the following:

 

 

Do you need a solicitor when buying in cash?

 

Even when buying a property with cash, you’ll still need a solicitor or conveyancer to do the legal work for you.

 

When buying with cash, your solicitor will not be required to liaise with your mortgage lender as no loan is required, however, they still must: 

 

 

When buying with a mortgage, local authority searches are mandatory, however, you can choose whether or not to have your solicitor complete them if you’re buying in cash.

 

Is buying with cash quicker?

 

When buying a house with cash you don’t need a mortgage, therefore there is no mortgage application process to go through and no legal work for you solicitor to complete when it comes to a loan. 

 

This means buying with cash is generally much faster than buying with a mortgage.

 

Can you get a mortgage later after buying with cash?

 

If you want to take out a mortgage on the property you’ve bought later, you can.

 

This would be classed as a remortgage and would be subject to affordability checks by your lender, as well as falling under the criteria for lending on a property you already own 100% of.

 

Top tips for buying a house in cash

 

1. Be aware of properties that are only marketed to cash buyers

Often properties are listed in this way because the seller wants a quick and uncomplicated sale. However, it could mean the property is unlikely to be mortgageable, perhaps due to a major defect or legal issue, so always speak to the seller’s agent in detail and find out the reasons why.

 

2. Always have searches

 

When buying with a mortgage, your lender will insist your solicitor carries out a host of local authority searches. These searches flag up any potential issues with planning applications nearby, as well as flood or drainage problems that could mean they refuse to lend on the property.

 

If you’re buying in cash, having these searches carried out isn’t mandatory, however, doing so means you’ll get crucial peace of mind that your investment is sound.

 

 

 

2022

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2021

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2020

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2019

The property market across Scotland - Quarter Two 2019 by SPC Scotland 2019-10-16 LORD PROVOST OPENS NEW-LOOK CENTRE 2019-09-17 The Dundee property market 2019-06-24 A 427 MILLION BOOST FOR THE HOMES MARKET 2019-01-21

2018

Budget Proposals to the ADS Rate 2018-12-18 BUYING OR SELLING GET THE FACTS 2018-08-24 BUYING INTO LIFE ON THE WATERFRONT 2018-08-23 As moving day looms dont panic just prep 2018-05-17 THE BEST OF BOTH WORLDS FOR HOMEBUYERS 2018-04-03 HOME COMFORTS FEND OFF BEAST FROM THE EAST 2018-03-07 V&A DATE MILESTONE FOR THE WATERFRONT 2018-03-02 FLAT SALES EDGE TOWARDS £100 MILLION 2018-01-23 PROPERTY SALES PUSH TOWARDS THE £440 MILLION MARK 2018-01-08

2017

FESTIVE GREETINGS FROM ALL AT THE TSPC 2017-12-19 PUTTING DUNDEE ON THE MAP 2017-11-15 TIME TO BRING YOUR HOME TO THE MARKET 2017-11-01 AUTUMN IS A GOOD SEASON FOR SELLING 2017-10-17 HIGH PROFILE OPTION FOR TOP PROPERTIES 2017-10-09 MARKETING YOUR PROPERTY TO THE MAX 2017-08-21 DO YOU LIKE TO BE BESIDE THE SEA? 2017-06-15 TIME LOOMING FOR A RE-MORTGAGE 2017-06-09 HAS THERE BEEN A BETTER TIME FOR A HOUSE SALE 2017-05-26 TIME TO PUT YOUR FLAT ON THE MARKET 2017-05-04

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