Buying a House Outright With Cash in the UK

Have you saved up enough to purchase a property without resorting to mortgages and loans? 

Here is everything you need to know about buying a house outright with cash in the UK.

Can You Buy a House With Cash in the UK?

Yes, if you have the funds available you can buy your home with cash.

However, the term ‘cash buyer’ doesn’t mean that you’re paying with physical cash. It actually means you have the available funds to buy the home and you do not need to rely on the sale of a previous property, mortgage, or any other kind of a loan from a bank or building society to finance the purchase. 

To buy a home with cash you will need to show proof of funds, usually a bank statement, demonstrating that you can pay the full value of the property. A cash gift is also accepted as long as you prove the money comes from a legitimate source in order to comply with Anti-Money Laundering regulations.

What Does ‘Cash Buyers’ Only Mean?

Some properties are listed as ‘cash buyers only’. These homes usually have unconventional construction, unusual building materials, structural issues or are buy-to-let properties sold with tenants in situ which might make it difficult or impossible to obtain a home loan on. Other properties may be listed as ‘cash buyers only’ because the owner wants a quick sale. 

Whatever the case, it is your responsibility to look into any possible issues and see if they might prevent you from getting a mortgage on the property down the line. Talk to the estate agent—if the problem is structural, you should hire a surveyor and look into how serious the issue is. 

How to Buy a House With Cash in the UK?

Buying a house for cash in the UK is no different than a traditional property purchase. The biggest difference is that buying a property with cash is much faster since you won’t have to apply for a mortgage. 

Taking out a mortgage is a lengthy and complicated process that involves liaising with a mortgage lender, as well as credit file and affordability checks. It can take 4  to 6 weeks—time you won’t waste if you are paying for the purchase in cash.

How does buying a house with cash in the UK work? 

1. Make an offer 

Find a property you’re interested in and make an offer on the home. As a cash buyer, you have higher chances of your offer getting accepted than a mortgage buyer, sometimes even if they bid higher. Sellers are usually very motivated to accept cash buyers as paying for a home in cash significantly cuts down on the average time to sell a property and involves less legal work. 

2. Hire a conveyancer

Even if you are buying property for cash you will still need the services of a conveyancer. Your solicitor will not need to contact a mortgage lender, but they will still need to get in touch with the seller’s solicitor and address potential issues, set the exchange and completion date as well as finalise all the transactions regarding the transfer of ownership.

3. Exchange contracts 

This is when the sale becomes legally binding. Before you exchange contracts with the seller, you will need to pay the deposit on the property which is usually 10% of the price. 

4. Completion 

The final stage involves completing transactions, registering the property in your name with the Land Registry and paying Stamp Duty Land Tax (your conveyancer will do these on your behalf).  Since you are paying in cash the deeds of the property will be sent directly to you rather than the mortgage provider. 

How long does buying a house outright with cash take in the UK?

Buying a property in cash shouldn’t take longer than a few weeks, although house purchases are a complicated procedure and it is quite common for unexpected issues and costs to arise during the conveyancing process. 

Can I get a mortgage after I buy a property with cash?

There is no reason why you can’t remortgage a home to buy another property or invest in the stock market. 

Keep in mind though that lenders will run traditional affordability checks even if you bought the house without a mortgage the first time around. They will also require that you’ve owned the property for at least 6 months. 

Benefits and Risks of Buying a Property With Cash

There are several perks to paying for a house in cash. 

• The sale is quicker. Since there is no mortgage involved, cash buyers can complete the purchase in a few weeks’ time. 
• Less risk of the sale collapsing. Most sales fall through because mortgage buyers often get rejected by lenders. Cash buyers, on the other hand, already have the money to purchase the property thus minimising the chances of a sale collapsing.
• No downward property chain. Property chains, especially ones with several people involved, can really delay a house sale. Cash buyers are not dependent on the sale of a property to buy a new one, making the entire process move along quickly and smoothly. 
• More flexibility. Cash buyers can pick and choose between properties, including buying a property on a short lease (most lenders will not approve a mortgage on a short leasehold).
• Competitive position. As mentioned above, sellers prefer cash buyers—sales are less likely to fall through and move a lot faster. 
• No interest and monthly mortgage payments. Loan repayments can eat up a lot of your monthly budget, so not having to cover them can help you save more money for the future.

As with any other major purchase, there are some risks involved when buying your property with cash. 

• There is no guarantee that you will get a lower price. Although cash buyers have more chances of getting a lower offer accepted than buyers with a mortgage, this is not always the case. Many sellers are not willing to reduce the price even if the buyer is ready to pay cash. 
• All your cash is tied up in property and you can’t access it if you need it urgently. You could take out a mortgage on the property, but you would be getting into debt that you might not be able to pay back.
• Your finances could be stretched too far. Houses are a huge purchase so you need to ask yourself whether buying a property with cash will leave you enough money to cover anything from unexpected major costs to daily expenses. 
• You will still pay property taxes and other charges. You may not have to repay your mortgage every month, but you’re still obligated to pay property taxes, such as Stamp Duty Land Tax as well as home insurance, or other related fees. 
• There could be issues with the property. Many cash buyers choose to forgo searches and property surveys since they are not mandatory when you buy property for cash. This way you will not be aware of any potential issues with the home until you move in. Remember it is hard to see problems with a house unless you get a proper survey carried out—some issues might seriously devalue the property making it very hard to sell later on. 

How to make buying a property with cash safer?

To avoid all or some of these risks:

• Hire a surveyor and look into the condition of the home and the land it sits on 
• Ask your solicitor to run searches (even if they mean paying more in conveyancing fees)
• Talk to a financial advisor about whether buying a property with cash is the best choice for your financial circumstances. 

Final Words

There are advantages to buying a house for cash in the UK—it puts you in a better position than other buyers and gives you some leverage when it comes to negotiating a better price. 

There are downsides to consider though. Although you will not have a loan to pay off, buying a property with actual cash does not always leave you in a favourable financial position. The purchase might overstretch your finances and leave you with little to cover unplanned expenses. Carefully weigh out the pros and cons and get some expert financial advice before you decide on buying houses with cash.