Buying a house outright in cash is more common than you may think. If you’re in this fortunate position but you aren’t sure what pros and cons are involved, we are here to help.
As long as you have the funds upfront to hand over to the seller, you should face no issues when buying a house with cash. However, like anything, there are advantages and disadvantages involved with this process.
What are the advantages of buying a house with cash?
It makes you a more reliable buyer
Having the cash readily available to purchase, means that there is less room for things to go wrong. There will be no affordability checks from lenders, no waiting around for property valuations to be carried out and no waiting for funds to be released. All of these things make you more attractive to the seller.
The process is less stressful
Many people consider the process of getting a mortgage to be stressful, however being a cash buyer means there is less room for things to go wrong, and the sale is pretty much guaranteed to go ahead. Being a cash buyer also makes the process less stressful for the seller, as they won’t need to worry about whether their mortgage will be approved.
The process is quicker
Going through the process of obtaining a mortgage can take time. As you don’t need to worry about this, you will be ready to move more quickly. The only thing you’ll have to wait for is any legal checks and surveys (if you decide to have a survey).
More security
Being a cash buyer means you won’t have the stress of being able to continuously afford your monthly mortgage repayment. Even if something unexpected was to happen and you weren’t receiving any income, you wouldn’t have to worry as you know you’ll always have a roof over your head.
No interest to pay
Everyone who takes out a mortgage will be charged interest on the amount being borrowed by the lender. Paying in cash means you will have absolutely no interest to pay and you won’t be subject to any early repayment charges if you decide to move.
What are the disadvantages of buying a house with cash?
Overstretching yourself
Being able to buy a house outright is quite an achievement, and if you’re fortunate enough to be in this position you need to make sure you can still afford the running costs of the property such as council tax, utility, and food bills.
Despite having the freedom of not needing to worry about monthly mortgage repayments, if you were unexpectedly unable to work, or got made redundant, you need to consider whether you would still be able to afford the property’s running costs. If you aren’t sure, it is worth getting in touch to discuss what protection policies are available to cover you if the worst were to happen. For example, building and contents insurance or income protection.
Faults with the house
There can be times where properties are being targeted at only cash buyers. You must consider why this is. It may indicate that there are issues with the property which would make it difficult or impossible to get a mortgage. If you are the buyer, it is definitely worth paying for a survey to be carried out which will allow for any potential issues to be identified and brought to your attention.
For more information on moving to a new house or getting on the property ladder, please feel free to contact our friendly team and we can put you in touch with an adviser.
For further information call: 0800 652 6649
Email: [email protected] or visit: www.mortgageadvicebureau.com/scotland
Your home may be repossessed if you do not keep up repayments on your mortgage.
There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.