There are two ways to pay for a house: one is to take out a mortgage and the bank lends you the rest of it. There are two choices: you can take out a loan, where you do payment, and the bank gives the rest, or you can buy the house directly with cash.
Can you afford to buy a house?
Cash is possible to buy a house if you have enough money to pay the seller upfront. It has its advantages and disadvantages, just like any other purchase. Let’s begin with the pros.
What are the advantages of buying a house using cash?
It’s easier to get the money upfront to purchase the house. You won’t need to clear affordability checks, wait for appraisals, release funds, etc. These things will make you more appealing to buyers.
The sale will go through because there’s less chance of things going wrong. This means that you, the seller, don’t need to worry about your buyer’s mortgage approval.
It can take some time to get a mortgage. Before funds can be released, you will need to wait for affordability checks to be completed. This allows cash buyers to be more flexible and move faster by removing the need for affordability checks. The only things you will need to wait on are the legal checks and any surveys (if required).
You don’t need to worry about your monthly mortgage payments because you are paying the entire house in full. You can rest assured that even if something happens, you will still be able to pay your monthly mortgage payments.
The lender will charge interest on any mortgage you take out. If you are a cash buyer, you will not have to pay any interest. Other charges, such as early repayment fees (ERC), are not applicable.
What are the drawbacks to buying a house with cash instead of a mortgage?
Do you want to overstretch yourself?
It’s a great achievement to find the cash for homes. However, it is important to ensure that you don’t overextend your budget. After you have paid for the house, make sure you have enough money to cover the ongoing costs like utilities and food. Utility and food bills.
Although you don’t need to worry about the mortgage payments, it is worth asking yourself if you are unable to work or disabled if you have to pay the monthly running costs. If you don’t know the answer, it’s worth contacting us to discuss any protection policies, such as income protection or buildings and contents.
Offers Below the Asking Price
Cash buyers often know they are in a good position and will offer a lower price. This might not be the best option for you, but it is worth considering whether you are more interested in a quick sale and no-chain buyer or a long wait to make a little more.
Problems with the house
Sometimes, properties are listed asking for cash buyers only. This could raise eyebrows because it could mean that the property is not suitable for mortgage financing. There could be structural problems, like subsidence or fire damage. If you are the buyer, it is important to have a house inspection so any problems can be addressed.