2

Although I'm no expert on mortgages and the property purchasing process when using one, I'm even less aware of how the process works when buying a property for cash. I will soon be in the fortunate position of having enough saved to purchase my first house outright, here in the UK.

Can someone who has done this provide a breakdown of how the process works? I imagine and hope it would be easier than using a mortgage; I can release the funds whenever necessary and buy any property I choose and can afford without lender restrictions. Of course a survey would still be required so I don't end up with a lemon plus a solicitor/conveyancer to ensure the paperwork all checks out, but what else should I be aware of?

Looking at this from the other side, during potential negotiations, is a cash buyer better for a seller than a mortgage user?

The other consideration I have is whether to go down this route at all, or instead put down a 50%+ deposit and keep a large chunk of liquidity. I appreciate this is more opinion- and circumstance-based than my main question, but thoughts are welcome.

  • Google there are loads of help available online. cash buyer is always preferred over a mortgage user. – DumbCoder Apr 5 '16 at 14:04
  • 2
    However, as a buyer, I'd much prefer a mortgage. My ten year rate of return on my investments is well above the 2.875% mortgage that I have. As well, at least here in the USA, the mortgage interest is tax deductible. – chili555 Apr 5 '16 at 14:26
  • Are you working with a realtor? Cash buyer should be much simpler and almost always preferred by a seller since there is no waiting for the lender. However, make sure you get all the inspections/title search and other details completed. This is what a realtor should coach you through. – jkuz Apr 5 '16 at 20:34
  • 2
    @jkuz: agreed - though in the UK, it would be your solicitor doing that kind of work, rather than a realtor/estate agent. The other big delay can be the other people in the chain, so a buyer with a mortgage, but who isn't selling, could be more attractive than one who is selling, but doesn't need a mortgage. – Steve Melnikoff Apr 5 '16 at 20:45
2

As average house prices continue to rise, almost 40% of homes in the UK are purchased with cash.

Stage 1 – Finding a property you can afford Stage 2 – Making an offer Stage 3 – Organise a solicitor and surveyor Stage 4 – Finalising the offer and mortgage (in your case, cash with proof of funds, balance due at closing) Stage 5 – Exchanging contracts Stage 6 – Completion and final steps

You don't need to prove where the money came from but, as you have said that you are a cash buyer, you do need to be able to prove that you have the cash to buy the house. So, assuming you have the money in an account with a bank or building society, you should be able to satisfy your solicitors by showing them a recent bank statement or passbook which clearly shows that you have whatever amount it is in cash.

  • 2
    Could you provide a source for the 40% statistic? – Steve Melnikoff Apr 6 '16 at 9:27
  • 1
    If the funds have been received into your bank account in the last 3 months, you will need to show where the funds have come from, especially if gifted from someone or inherited. This is part of standard Anti-Money Laundering practices required by law in the UK. I'm currently going through the process myself which is why I know. – toadflakz Apr 18 '16 at 15:19

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.