Do I need a solicitor to buy a property with cash?
Buying property with cash is an increasingly popular option. But how does it work – and what are the pros and cons? Find out in our explainer article.
In today's housing market, cash buyers comprise a growing section of the property-buying population. The number of cash buyers has risen from 29.3% in January 2022 to 39% in January 2023.
It's hard to say exactly why, but rising interest rates undoubtedly play their part. A cash buyer can buy a
property outright without getting a mortgage and being tied to those rising monthly repayments.
Cash buying is a simple enough concept – but there's one distinction that needs making. If your plan is to sell your home and use those funds to buy another property outright, it's not cash buying
per se.
Cash buying, then, is when you use your savings to buy a property without going through the hassle of getting a mortgage.
It's a method that has its advantages and disadvantages. In this article, we look at the ins, outs, dos, don'ts, pros and cons of buying property with cash.
How does cash buying work?
In terms of the process of buying a property, cash buying is very similar to buying with a mortgage. The main difference is that cash buying has the potential to take far less time because you're not waiting for your mortgage application to be approved.
In both cases, you need to go through the following stages:
- Find a property and make an offer.
- Have your offer accepted.
- Instruct a licensed conveyancer or conveyancing solicitor to carry out conveyancing searches.
- Exchange contracts and pay the deposit.
- Pay the rest of the money for the sale along with outstanding legal fees.
- Complete the purchase.
Do you need a solicitor?
You'll need a licensed conveyancer or
conveyancing solicitor to carry out certain parts of the process, including:
- Liaising with the seller's conveyancer
- Obtaining essential information about the property
- Managing the transfer of money
You don't necessarily need a solicitor to carry out
conveyancing searches – you can do it yourself if you choose. However, searches are even more important when buying with cash, so it pays to get the job done professionally.
The reason that searches are so important is that if you buy a property with a mortgage, your lender will have already got all the information they need about your property. After all, they're not going to lend you money for a property that poses them a risk.
When buying with cash, however, it might not be immediately obvious whether a property is on contaminated land or a flood plain. You might not spot structural damage at first glance.
Conveyancing will only set you back a few hundred pounds – a drop in the ocean when you're buying a property outright. The alternative is taking the risk and then finding much later that you need to shell out for substantial repairs.
What are the advantages of buying with cash?
Cash buyers stand out from other buyers because they promise a quick and easy sale. This means they're in a good position to negotiate and potentially get the property below the asking price. They can buy and move in at a far quicker pace than if they were buying with a mortgage.
Issues related to mortgages are one of the most common reasons for property sales to fall through. If you buy with cash, you're removing the possibility of being rejected by your mortgage lender or getting gazumped while you're waiting.
Buying without a mortgage also means you're not tied to rising interest rates.
Some properties are "cash buyer only", so you may have a broader range of properties available than other buyers.
When you buy with cash, there's no complicated downward chain poised to ruin the deal. Because you're not selling your property to fund your purchase, the chain is simplified and there are fewer variables to contend with.
Finally, buying with cash means you own your home outright. That means you'll never be in a position where you can't afford a roof over your head. This provides a level of security that buying with a mortgage doesn't.
What are the disadvantages of buying with cash?
From a financial point of view, buying with cash ties your money up in bricks and mortar where it loses its liquidity. If you want access to your cash, you should consider saving it instead.
Yes, buying with cash is usually quicker than buying with a mortgage – but other factors can slow things down. For instance, searches could take longer than expected or the seller may not be able to move out in time.
If you're buying to let, buying with cash isn't always the most prudent option. In some cases, buying two cheaper properties with a buy-to-let mortgage can get you a better return on your investment.
Why are some properties "cash buyers only"?
If you see a property advertised as "cash buyers only", you should ask your estate agent for more details.
The best case scenario is that the seller simply wants to shift their property quickly. But it could be that the seller knows they can't get a mortgage on the property.
If you don't ask questions early on and carry out thorough checks, you could end up with a property with serious issues.
Can you buy with cash and get a mortgage later?
Yes. Some lenders, however, will require you to have lived in the property for six months before giving you the mortgage.
Conclusion
Whether you buy with cash or a mortgage, it can be advisable to have a conveyancing solicitor on hand to liaise with the seller, carry out essential tasks and check that all is well at your new property.
It's all about peace of mind – and with such large amounts of money at play, you don't want to be without it.
Are you looking for a
conveyancing solicitor in Leeds, Harrogate or Pontefract? Get in touch with Milners Law today for a free, no-obligation consultation.
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