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.
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.
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.
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.
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.
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.
No, searches are not mandatory when you buy a house for cash. The same goes for property valuations and surveys—there is no legal requirement to carry out searches and surveys since there is no lender involved.
Even so, it is a good idea to carry out local authority searches, environmental, water and drainage searches and property surveys as this will give you more insight into the property and its condition.
This procedure takes about two weeks to complete so you are not really losing a lot of time. In fact, you will be gaining valuable information about the home, including potential structural issues and planned constructions in the area.
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.
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 it take to get from exchange of contracts to completion? Find out here.
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.
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.
There are several perks to paying for a house in cash.
As with any other major purchase, there are some risks involved when buying your property with cash.
To avoid all or some of these risks:
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.
No, taxes are the same whether you buy property with cash or a mortgage. In other words, you will be required to pay Stamp Duty Land Tax or income tax if you are renting out the house. That said, taxes should not be taken lightly and it is best to discuss these matters with accounting professionals
Yes, the conveyancing process is the same whether you are paying in cash or taking out a loan. The difference is you might pay slightly less in conveyancing fees since there is less legal work involved.
To satisfy Anti Money Laundering regulations, the buyer’s conveyancer will check whether the cash used to buy the home is legit. Usually, a bank statement will be enough to prove that the funds come from a legitimate source.
Buying a house outright with cash in the UK is a much faster process than purchasing a home with a mortgage. In general, the procedure could be completed in a few weeks, or even 30 days if the seller is particularly motivated to complete the sale quickly.
My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.