Buying a house with cash offers a unique set of advantages and considerations, as the absence of a mortgage changes the process slightly. Let’s look at what it means to buy a house with cash, the pros and cons of buying with cash, and a step-by-step guide to the process of completing a purchase.
Contact your local Whitegates agent today to find your perfect property.
What is a cash buyer?
Being a cash buyer simply means that you can buy a property outright without needing a mortgage or a loan. It also means you don’t have to rely on the proceeds from the sale of an existing property to fund the purchase of a new one.
Related: A guide to buying property off plan
Advantages of being a cash buyer
Being chain-free
As a chain-free buyer, you will be an attractive option to sellers who are looking for a risk-free sale without the potential of a chain collapse.
Related: Common property chain problems and how to avoid them
No need for a mortgage application
As you have enough cash to pay for the property outright, you do not need to worry about applying for a mortgage. This eliminates the risk of being rejected by a lender and therefore speeds up the transaction.
Saving on interest
By paying upfront with cash, you eliminate the need to make monthly mortgage payments and, therefore, don’t have to make any interest payments.
Flexibility
As a cash buyer, you have more flexibility in choosing your terms and conditions, as you are not bound by lender requirements or restrictions.
Related: Buying a property on your own: how to make it possible
Limitations of being a cash buyer
Less liquidity
Spending such a large portion of your wealth on buying a house upfront can limit how much money you have set aside for emergencies or living costs.
Reduced options
As a cash buyer, you may have to search for lower-value properties than you would if you had a mortgage.
Less financial leverage
Although you may be favourable to some sellers, if there is a lot of competition for a property, negotiations and bidding wards could price you out of a deal.
Related: Top tips for planning your finances when you move
Buying a house with cash: Step-by-Step
Buying a house with cash can be a slightly different process than with a mortgage, and there are slightly different things you need to consider. Here is a step-by-step guide to the process:
Hiring a conveyancer
Even when buying with cash, you need to hire a conveyancer to ensure the transaction goes as smoothly as possible.
Although you don’t have to go through the process of applying for a mortgage, conveyancers are still crucial, as they handle the legal side of the transaction and uncover any potential issues with the property.
Additionally, conveyancers oversee the exchange of contracts, transfer of ownership, and guide you through all the paperwork you need to complete.
Related: Property conveyancing explained
Finding a property
As a cash buyer, it’s especially important to find a property that is suitable for your demands, requirements, and budget. Because buying with cash gives you the advantage of being able to seal a transaction quickly, it’s worth regularly searching for new listings from your estate agent and being prepared to make quick decisions.
If a property is listed as ‘cash buyers only’, it is important to find out why this is. Although it may sound like the perfect chance for you to secure a property, there are numerous reasons why properties could be listed this way, such as poor condition, legal issues, or simply the seller’s preference.
Viewing the property
The freedom that being a cash buyer provides allows you to focus more on the specific features of a property, as well as its condition and renovation potential, without the constraints of a mortgage lender. Make sure to pay close attention to details such as the roofing, flooring, plumbing, and electrical systems before rushing into making an offer.
Related: Features to look for in a new home
Putting in your cash offer
Once you have decided you are happy with the property and are ready to put in an offer, you will need to work with your solicitor or conveyancer to write an offer letter. Once the offer is prepared, submit it to the seller or their estate agent, along with a bank statement to prove you can afford to buy the property in cash.
Performing a property survey
Although you won’t have a lender requiring you to have a survey carried out, it is still crucial to have one conducted to ensure you are making a safe investment and there are no hidden issues. Your conveyancer will help you find a qualified surveyor who specialises in the property type you are buying.
The surveyor will then conduct a comprehensive inspection, examining structural integrity, looking for potential issues, and highlighting any concerns they may have in a detailed report.
With the assistance of your conveyancer, you should carefully review the report and its findings. If it raises issues, you can contact the seller to ask them to rectify them or even negotiate a price adjustment. If the problems are substantial and raise doubts about the property’s suitability, your conveyancer might suggest withdrawing your offer altogether.
Exchanging contracts
If you are happy to proceed with the sale and have agreed terms with the seller, your conveyancer will exchange contracts with the seller’s solicitor. This legally binding exchange solidifies the agreement and officially outlines the terms of the sale, including the buying price and the completion date. Both parties commit to the sale once they exchange contracts, and failure to complete the transaction may result in financial penalties.
As a cash buyer, you don’t have to wait for a lender’s approval, so the process should be relatively quick and straightforward.
Completion day
The completion date marks the end of the process as the transaction becomes official. The seller’s solicitor will receive the funds from your conveyancer, and you will receive the keys and ownership of the property.
Are you looking to buy a house?
If you’re looking for your perfect property to buy, contact your local Whitegates branch today.
Our team of experienced agents will use their knowledge and insight to find you the ideal property based on your circumstances and requirements.
