Most people buy a home with the help of a mortgage, but what if you’re in a position to buy with cash? It’s an enviable position to be in, for sure. There are so many perks to buying with cash, including not having to deal with mortgage rate increases, having no mortgage repayments and paying less (you won’t be paying all that interest over the years!). Plus, everything tends to move quicker, which is a real bonus.
However, buying a property with cash requires a different approach, so it’s good to be aware of all the facts. Don’t worry; we’ll cover all the details so you can feel more confident when it comes to making that big purchase.
This blog post explores the details of buying a property with cash and why it’s important to understand the intricacies before committing. Finally, we’ll understand how buying a house for cash works so well.
Understanding Cash Buyers
In the current market, where interest rates and house prices can fluctuate, buying a house with cash can be an attractive proposition to both buyer and seller. As there are fewer steps involved, cash purchases can usually be completed much faster. Less ‘moving parts’ also means less to go wrong and potentially derail a transaction.
But what does ‘cash buyer’ mean? Put simply, being a cash buyer means you have the money available to purchase a house without having to take out a mortgage or sell your current property. Effectively, you could complete the purchase as soon as your offer is accepted. However, being a cash buyer does not mean cash in the literal sense of paper money.
What does cash buyers only mean?
A seller that stipulates ‘cash buyers only’ is saying they will not accept offers from people who are funding the purchase via a mortgage, the sale of other assets or inheritance. They want somebody who has the finance immediately available.
There can be several reasons why some sellers insist on cash buyers. Some are legitimate but some are also potential red flags. In most cases, this is because the seller wants to speed up the process for any number of reasons. They might want to avoid a chain, a potential sale fall through because of a mortgage rejection, be selling via auction or are selling the property with tenants in place, among others. These are perfectly valid reasons.
However, some sellers insist on cash-only buyers because of inherent issues that make obtaining a mortgage hard or impossible. These could include:
- Structural issues of varying severity
- Damage due to fire or flooding
- The presence of Japanese knotweed
- Certain materials used in constructing the property such as asbestos, RAAC or cladding
- Damp and/or black mould
- Energy efficiency rating of D or lower
- The age and state of repair of the building
- A short lease
- Location in an undesirable or hazardous areas due to high crime levels, natural disaster risks or contamination
- Legal issues such as boundary disputes, title disputes, restrictive covenants or negative easements
Some lenders may also refuse a mortgage on a property in a mixed-use building, such as above a commercial premises. They are often cautious that the commercial building could be changed which would negatively impact the value of the property above. For example, a nice cafe could be turned into a betting shop or other establishment with a perceived lower value.
If you’re a seller, don’t miss our guide on How to Add Value to Your Home.
Does cash buyers only mean no mortgage?
Cash buyers only, what does it mean? It means that the seller will only accept offers from buyers who can pay the full purchase upfront, without needing a loan or a mortgage. Yes, by definition, a cash buyer will not have a mortgage for the purchase of that specific property.
What is the Process of Buying a House with Cash?
To begin with, the process of buying a property with cash is very similar to any other
- Once you’ve found your ideal property, you negotiate and make an offer either via the estate agent or directly to the seller. It’s worth stating you are a cash buyer at this point as you may be in a stronger negotiating position.
- Once the offer is accepted, the conveyancing process begins and any surveys take place. If the property is advertised as cash buyers only, it’s essential to do your due diligence at (more on that below)
- Pay your deposit and exchange contracts.
- Pay the final balance by the due date and complete the transaction.
How do cash transactions differ from traditional mortgage transactions?
While the process is the same, traditional mortgage transactions require the approval from a mortgage provider. They will need to process the application and undertake their various checks on the buyer, they will also stipulate various surveys and checks on the property. These additional checks and legal processes take time, and offer an opportunity for things to go wrong, delaying or potentially halting the entire purchase.
Conducting Due Diligence
Buying a house with cash technically doesn’t require any additional checks that a mortgage lender may stipulate. This is why you must do your due diligence and ensure the property you are buying does not have any major structural, legal or other issues which could lose you money.
What’s more, buying a property that is un-mortgageable means you are likely to be restricted to cash buyers in the future when it comes to selling up. You don’t want to be stuck with an asset you can’t get rid of.
If you’re in this situation, don’t hesitate to contact Zapperty. We will make a cash offer on any property within seven days of your application, guaranteeing you a quick, hassle-free sale.
What are the advantages of buying a house with cash?
There are lots of advantages to buying a property with cash, such as:
- A quick sale that’s less likely to fall through
- Fewer people involved means less admin cost and stress
- Appealing to sellers
- A stronger negotiating position
- No onward chain
- Cheaper in the long run as you’re not paying interest on a loan
- You may also have more disposable income without having to make monthly mortgage repayments
- Insulated from mortgage rate rises
There are many reasons why a cash sale is a great way to buy or sell your home. You might have several doubts on how does buying a house for cash work? Zapperty is the answer for that . If you’re looking for a quick, simple sale of your property, contact Zapperty today for a free cash offer within seven days.