The Pros And Cons Of Buying A Home With Cash 

Buying A Home With Cash

Buying a home with cash means paying its full cost without taking a loan or credit, or any type of financial help. It means paying the full amount from your own pockets via money transfer, a cheque, or hard cash.

Paying in cash has several benefits over the mortgage and other credit options such as big savings, no interest, and total ownership at a lower cost although with a few minor drawbacks.

We shall talk more about the pros and cons of buying a home with cash but first let’s understand-

What is the process of buying a home with cash?

The process of buying a home with cash payment is rather simple and it all starts with having enough money in your account since you won’t be borrowing any from a bank or lender. The source of the money would strictly be your savings, investments, or any other liquid funds that you might have for instant availability.

Once you have the funds ready, it’s quite simple from thereon, similar to buying a house with a mortgage, except for the liabilities that come with the latter.

Moving on, buying a house with cash can save a significant amount of time it takes to process and close the deal which in the case of a mortgage can take over a month. But with cash at hand, a week or two at maximum. And this brings us to our first advantage of buying a home with cash, i.e.

Advantages of buying a home with cash

1. Faster sale & negotiation

Since cash transactions are almost instant, it can give you an upper hand in negotiating the purchasing price of the property should the seller be in a hurry. Plus it also saves the time to do the necessary paperwork and legal formalities. Thus closing the sale at a much faster rate than when buying a property through a mortgage.

2. A competitive edge in the market

Sellers prefer dealing with parties with cash at hand for a number of reasons. First- they don’t have to worry about the financial health of a buyer, like any last-minute financial fall or crisis, and secondly- don’t have to wait for the loan approval/ refusal.

3. No mortgage, insurance, or interest, hence long term-savings

Another great advantage of buying a home with cash is the total savings that one can make. From not needing to go through the lengthy process of a loan approval, to avoiding all the costs and fees associated with the mortgage process. And that includes the monthly mortgage payments, insurance fees, and interest rates that you’ll otherwise have to pay for years or decades to come.

Buying A Home With Cash

4. Lower closing cost

Speaking of savings, the lower overall closing cost is yet another benefit of paying with cash as you won’t have to pay for additional charges such as lender fees, application fees, loan processing fees, and title insurance policy.

5. Complete and immediate ownership

Paying the amount in full will also ensure that you get full outright ownership of your home since there is no mortgage lender involved in the first place. This means even if you lose your job or source of income, you won’t have to worry about losing your home.

Disadvantages of buying a home with cash

1. Less cash/ liquidity

Depletion in your account balance is normal after you’ve spent a large amount of your savings on the payment of your house. What’s worrying though is the nature of investment which in this case is non-liquid, meaning you cannot cash it out as quickly as other liquid funds such as mutual funds and stocks dividends, thus reducing your financial liquidity.

2. No tax deductions

Since you won’t be using any mortgage plan to pay for the home, you won’t be eligible for mortgage tax deductions either, which is a sound way of reducing taxable income.

3. Can’t go upside-down

Since you have not borrowed a mortgage loan; you won’t be able to go upside-down on it either. And while you’d be able to stay in your home for as long as you like, you may have to take the hit or financial loss should you choose to sell it when the market is tight.

Buying A Home With Cash

4. Additional costs

Although cash payment would definitely save you from paying lender related costs, you’d still have to pay for additional costs associated with owning a house on an annual basis. For instance property tax, property insurance, homeowner association fee, utility bills, repairs, maintenance charges and so on.


While buying a home with cash can bring a lot of advantages to the table, it can also drain you off of most of the savings you might have made in your life. Therefore, it’s also important to balance your budget by keeping at least some portion of your savings for emergencies in case you want to pay in cash.

And if you don’t find it manageable, you can always go for a home loan after buying the property on your own using a number of options such as delayed financing, cash-out refinancing, a home equity loan or line of credit, or with a reverse mortgage plan should you meet the age criteria.

And if you are planning to buy a home with cash in London, seek expert assistance before making any decision. Get in touch with a reputed real estate broker to avoid complications and difficulty.

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