Investment - What can you afford?

How to buy a house with cash

5 min read

There are several benefits for those who can afford to buy a house with cash. Find out more about the process of buying a house with cash, the benefits and the risks.

  • Arti Dhamu, Move Specialist at My Home Move Conveyancing
    Arti Dhamu

    Move Specialist

    Published January 30th 2024

investor looking at online to see whether he can buy a house with cash

Buying a house with cash is an attractive option for those who can afford to do so. Using cash to buy property has a number of benefits, including avoiding interest rates and potentially faster conveyancing. Learn about buying a house with cash, including the advantages and disadvantages, and the process of cash buyer conveyancing.

In this article we explain:

Who can buy a house with cash?

Anyone can purchase a house with cash by using their own money instead of getting a mortgage to pay for it.

Buying a house with cash vs being a ‘cash buyer’

There is a difference between buying a house with cash and what is known as being a cash buyer. A cash buyer is someone who has the money to buy a house without needing to sell another property first. Whereas, buying a house with cash simply means that you won’t be using a mortgage to pay for the house, you may still be getting the funds from a house sale though.

What are the advantages of cash buyers for sellers?

There are multiple reasons why a seller might accept offers from cash only buyers:

  • They might want a speedy sale

  • The property may have structural issues or construction abnormalities which would make it difficult to get a mortgage

  • They might be selling a buy to let with tenants still in situ

  • They might not want to be part of a chain

What is the conveyancing process when buying a house with cash?

Buying a house with cash is essentially the same as buying with a mortgage, however, it can be faster and easier.

  1. Find a property you want to buy

  2. Make an offer and have it accepted – let them know you are buying with cash as this might make your offer more advantageous

  3. Instruct a conveyancer to take care of your legal work  - they will do all the checks and conveyancing searches if you decide to go for them (as you’re not using a mortgage you may not need all the standard conveyancing searches)

  4. Arrange a property survey

  5. Exchange contracts and pay your deposit – the property transaction is now legally binding

  6. Completion – this is when you send over the rest of the money for the property and pay the remaining legal fees

How do you show proof of funds when using cash to buy a home?

The estate agent requires proof of funds to confirm that you have enough money to purchase the property with a cash offer. This is necessary to ensure that you can afford the property.

They will also inquire about the source of the money. They have a legal obligation to verify your funds and ensure they are not the proceeds of crime. This is in accordance with anti-money laundering laws.

What are the benefits of buying a house with cash?

There are lots of benefits of being a cash buyer, which will make you more attractive to sellers, these include:

  • You’re a more attractive buyer: As a cash buyer, you present as a lower risk to the seller, as you don't need to worry about getting approved for a mortgage. You may also be chain free and not waiting for the sale of another property to fund your cash purchase. These things can contribute being able to negotiate better terms for the property you wish to buy.

  • The conveyancing process is a lot quicker: If you don't need a mortgage, the conveyancing process can be faster. This will reduce the time it takes for the sale to finish. This makes you an even more attractive buyers to someone who wants a quick sale.

  • You’ll avoid paying interest rates: As you won’t have a mortgage as a cash buyer, you won’t be paying interest to a lender. However, if you do use savings to pay for your property, you will no longer be earning interest on them.

  • More security: Buying a house with cash mean that you will own it outright and you won’t need to worry about monthly mortgage repayments. So, even if your circumstances change (like losing your job or no longer being able to work), you have the security of owning your own home

What are the risks of buying a house with cash?

While being a cash buyer does have many advantages, there are some risks that you should be aware of:

  • Lower prices aren’t guaranteed: It is often presumed that cash buyers may get a lower offer accepted on a property that people who are buying with a mortgage. However, this is not always the case. Some sellers prioritise price and are willing to choose a longer chain to get a higher price for their property.

  • Be careful of overstretching your finances: When you buy with cash, you don't have to worry about monthly mortgage payments. However, it is important to note that there are still other monthly expenses to consider. These expenses include energy bills, council tax, and food.

  • Ties your money up in one investment: Investing in property can be a good choice for your savings. However, it makes your savings less accessible, and the value of the property can change. We recommend speaking to a financial adviser to make sure it is the best move for you.

  • Not the only option for buy-to-let: Buying a rental property with cash is beneficial because there is no need to allocate the rent money for mortgage payments. This allows for more flexibility in using the rental income for other purposes or investments. However, it might make more financial sense to buy two cheaper properties, with a larger deposit, using a buy-to-let mortgage, and the combined income could be more than the one bought with cash. Again, we recommend that you speak to a financial adviser to understand which is best for you.

Can you save on conveyancing fees if you buy a house with cash?

When purchasing a house, whether with cash or a mortgage, you must consider conveyancing fees. These fees cover the cost of hiring a professional to handle the necessary legal work. However, there are some fees that you might save on.

You don't have to pay certain fees for the mortgage part of the conveyancing process. These fees include admin fees and surveys. You might save money on conveyancing searches if you don't use a mortgage lender. However, it can still be a good idea to get them for your own peace of mind.

Can you buy a house with cash then get a mortgage later?

Yes, you can buy a property with cash and then remortgage it later. Some lenders require you to live in your home for six months before they approve your mortgage application.

Mortgage lenders may also ask you ask you why you are looking to remortgage when you own your property outright. They will check if you can afford to pay your mortgage in the future when you apply for it.

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