How to Buy a House With Cash

Written by Martha Lott Reviewed by Emma Lunn

4th Feb 2021 (Last updated on 11th Apr 2024) 9 minute read

Can You Buy a House With Cash?

It is possible to buy a house with cash if you have the funds available.

To purchase a ‘cash buyers only’ home, you would have to supply the seller with proof of funds to show you have the full value of the property ready. A bank statement from your account will usually suffice. Cash gifts are also acceptable as long as you can prove the money is coming from your bank account in the UK.

Due to Anti-Money Laundering regulations, the buyer’s conveyancer will need to check the funds from a legitimate source. There will also be restrictions when it comes to using money from other countries.

What Does 'Cash Buyers Only' Mean?

A ‘cash buyers only’ property means the seller will only accept offers from buyers who already have the money available.

Buyers who require a mortgage, loan or another way to obtain funding won’t be considered. Buyers with funds waiting to come through, such as an inheritance or employment bonus, may also be rejected.

Why are Some Properties Cash Buyers Only?

Here are some reasons why a property might be labelled as cash buyers only:

• The seller is looking to quickly release equity

• The property is unmortgageable - this could be due to a variety of different reasons such as major structural damage or a high risk of flooding

• The seller is a landlord selling a tenanted property

• The home is being sold at auction or via a sealed bid

• It is an inherited home and needs extensive work

• The sellers have been gazundered and are looking for a quicker sale

• Japanese Knotweed is present

• The property is too small to get a mortgage on

• There are legal complications associated with the home

• There is a considerable amount of condensation and damp present

• It’s a leasehold property with a short lease

Some properties will be marketed as ‘open to a cash offer’ rather than ‘only accepting a cash offer’. Approach cash-only sales with caution as there could be something wrong with the property that would deter mortgage lenders from lending on it.

Cash Buyers vs Mortgage Buyers

The most obvious difference is that cash buyers do not have to apply for a mortgage.

This means they will often spend less money than a mortgage buyer due to there being no interest payments to a lender. Therefore you could save money on some conveyancing fees by not doing the searches usually required by a mortgage provider. This includes things such as affordability checks and valuations.

It can also mean that the conveyancing process for a cash buyer can be completed much more quickly.

A previous study from One77 Mortgages discovered that, on average, mortgage buyers pay 9% more than cash buyers in the UK. This is corroborated by the November 2020 UK House Price Index as cash buyers in England paid an average of £250,255, whilst mortgage buyers paid £274,999.

It’s not just property prices that can be cheaper for cash buyers. Buyers applying for a mortgage will have to be scrutinised by their lender and will also face added conveyancing fees.

However, both types of buyers will still have to pay:

• A deposit
• The purchase price of the property
• Stamp Duty
• General conveyancing fees

What is the Process of Buying a House With Cash?

The process of buying a house with cash is very much similar to a traditional property purchase. The major difference is, however, that the buyer will not have to go through the process of applying for and arranging a mortgage.

As a cash buyer, you still need to hire a conveyancer. You must factor this into the cost of buying the property. Conveyancers will handle the legal aspects of the sale and liaise with the seller’s solicitor. However, you won’t have to apply for a mortgage in principle or be put through a variety of checks by a lender. Instead, you will have to provide a bank statement as proof of funds.

To assess the property, cash buyers should still continue with the relevant conveyancing searches. These searches will provide you with more information about the property you’re buying.

Cash buyers should also arrange a property survey. Mortgage lenders require a mortgage valuation before the application can be approved. However, many buyers will instead opt for a property survey to assess the condition of the home as well as its value.

Cash buyers should also compare surveying quotes. You should find a surveyor to inspect the building, especially as some properties are marketed as ‘cash only’ due to extensive damage or defects.

Buying a House With Cash in Scotland

The process for buying a house in Scotland is different compared to England and Wales. Property buying is typically quicker and there is less chance of buyers being gazumped. This puts Scottish cash buyers in an even better position as it could potentially speed up the process even more.

There will be noticeable differences in the conveyancing process in Scotland, as the seller will have to arrange a home report and the transaction will rely on the conclusion of ‘missives’. The missives will include a variety of legal documents as well as the final contract.

It typically takes around 8 weeks to buy a house in Scotland, whilst in England and Wales, it can take around 12 weeks. Buying a house with cash may shorten the process.

What are the Benefits of Being a Cash Buyer?

1. A potentially quicker sale

If a buyer has to secure a loan or mortgage first, it can often delay the transaction. The lender will need to do an affordability assessment before confirming a mortgage offer which can take a couple of weeks. Mortgage lenders will also require specific surveys and legal checks to be carried out whilst a cash buyer may not want to wait for these.

2. Less risk of the sale falling through

Sales often collapse because the buyer can’t get a mortgage. This won’t be the case for cash buyers.

3. No downward property chain

As a cash buyer doesn’t need to depend on the sale of their previous home, they reduce the length of the property chain. This means there’s less risk of the transaction being delayed or collapsing. According to data by the HomeOwners Alliance, 1 in 5 collapsed property sales in the UK are the result of another sale falling through.

4. It can be less stressful

Buying a house with cash can make the process less stressful for both the buyer and seller. Whilst the buyer doesn’t have to worry about being approved for a mortgage, the seller has the reassurance that the funds will be available.

5. More security for the buyer

As a cash buyer, you will immediately own the property outright. No third party will be involved and there’s no risk of the lender repossessing your home due to being behind on mortgage payments.

6. It can save the buyer money

Cash buyers won’t have to pay interest on any large loans, or any mortgage fees, meaning they will be paying less money for the home in the long run.

What are the Risks of Buying a House With Cash?

1. Less flexibility

Even if you have the funds ready and waiting, it can mean a loss of flexibility when using such a large sum of money. It could limit your options further down the line, making it difficult to save for a new deposit should you decide to sell.

2. Lack of property checks

Mortgage buyers are required to conduct property surveys and conveyancing searches. While they cost money and take time, they’re worth doing. You still have the option of arranging them if you are a cash buyer but you will have to speak to your conveyancer.

3. Loss of liquidity

If you have money in the bank, it might not always be a good idea to tie it up in property. You will need to make sure you have enough money for living costs and emergencies.

4. There could be something wrong with the home

Properties marketed as ‘cash buyers only’ normally have something wrong with them. These could include structural problems, unconventional building materials, unmortgageable or, if it’s a leasehold property, it could have a short lease.

Can You Save on Conveyancing Fees if You are a Cash Buyer?

Technically, cash buyers can save money on conveyancing fees when purchasing a property. This is because some checks carried out during conveyancing will be optional. You can find out an estimated cost using our Conveyancing Fees Calculator.

However, although cash buyers can save money by choosing not to arrange these searches, they should still consider organising them. If you don’t conduct certain property searches your conveyancer won’t be able to find vital information concerning the building and local area.

These searches could highlight specific issues that would help you during negotiations or when selling the property in the future.

How Can You Make Sure That Your Property Purchase is Safe?

To help eliminate some of the risks that come with buying a house with cash, you should carry out the same checks as a mortgage lender would. There are 2 main ways that you can do this:

Carry Out Property Searches

Your conveyancer will usually organise these searches as part of the legal process. But it’s still important that you read the reports thoroughly and ensure all the vital checks are carried out.

Some of the searches include a Local Authority Search, a Drainage and Water Search, an Environmental Search and the Land Registry Title Plan. By asking your conveyancer to arrange these as a cash buyer, you will discover information about the property such as restrictions or highway information, contaminated land and property boundaries.

Arrange a Property Survey

A cash buyer won’t require a property survey to purchase the home, but it’s a good idea to arrange it anyway. A property surveyor will assess the building and its structure. The report will uncover any major damage and will highlight signs of damp and subsidence. A RICS Level 2 Home Survey (homebuyer survey) is the most common survey type, while a RICS Level 3 Home Survey (building survey) is more in-depth.

Not getting a survey done may save you money in the short term. But it could cost you dearly in the long run if the property has problems that are expensive to fix. If you know about any issues before you buy, you can use this information to negotiate a lower price.

How to Find Cash Buyer Only Properties

Property portals Rightmove and Zoopla usually state whether a property is for cash buyers only. They also have different tools you can use when searching for a new home.

Rightmove listings will often show you the last 3 sales on the same street as the property listed to help you compare prices. Another property portal worth looking at is On The Market. You could also ask local estate agents if they are selling any cash-only properties.