What are the advantages and disadvantages of buying a house for cash?
Monday, March 9th, 2009 at
2:53 am
Am buying a flat in the UK with the intention of renovating it and sell it on. Probably have enough money to buy with cash with enough spare for the renovation.
Please can someone tell me what the various advantages and disadvantages are of taking this route as opposed to getting a mortgage to buy the house with.
Many thanks
MAtt
Repossession
Related articles:
- Do I need a house survey for buying a flat I have already lived in for over 3 years? I am buying the 1-bed flat that I have been renting for the last 3 1/2 years and confused about if I need to get a Home Buyers Survey....
- is it a good time to renovate? due to current house price plummet? i am 3.5 months into buying my first property. its a two bed flat in a desirable area that needs renovating and modernising. it needs double glazing and central...
- I own a flat, I would like to rent it and buy a larger house to live in. How do I go about my mortgage? I live in the UK and I own a one bed flat. I would like to buy a larger house to live in and rent my flat. Is there...
- How can we get some instant cash without having to pay it back? My husband and I are both WORKING FULL TIME at GOOD, SECURE JOBS but we are just about breaking even and saving just a little each month. We are...
- What monthly costs are involved in buying a house/flat. Mortgage repayment will be £500/month but what on top? what extra charges am i likely to get? this is south east england by the way. Rates,Council Tax etc. what would i be looking at IN TOTAL per month?...
Tagged with: Buy House • Buying A Flat • Intention
Filed under: flat renovation
Don’t part with your cash.. Borrow on it…Consult a financial adviser - don’t tell them your real name. - You only buy with Cash if your Dodgy and you don’t want lenders or the Inland Revenue to peek at your Wad..
emm from my experience. went u buy cash. u can save money from paying interest. but if something happen could hard to return back that money your given.
The above 2 answers are both wrong.
Call a lender, many lenders, to find your best program for borrowing. You will not only have to give them your REAL NAME but a great deal more personal information, but everyone who borrows does it. Borrow with little down as you can. Team up with a realtor who works in the area so you can get an idea of what you can sell it for. The amount you buy it for and the amount you sell it for is called the spread. The spread is where you see how much you can invest and make a profit.
no disadvantage, if you have cash use it you can always get an equity line of credit if you need $$$$ later
In the U.S. mortgage payment are tax deductable. Not sure about UK.
Another approach is to compare opportunity costs.
1. How much interests you need to pay to borrow.
2. If you borrow, you keep cash in your pocket, how much income can you bring in?
Compare amount of item 1 and 2.
if your wanting to be an investor cash is the best way to go if you have it the reason is number one you wont pay any interest think about that i mean that is pretty important ,an number two on a cash deal you can close faster therefore you can haggle the price lower
In most cases, it will be better for you to get a mortgage. Even Bill Gates has a mortgage on his home. The reason being is that interest rates are still fairly low (at least in the U.S. - I’m unsure of the U.K.). You would be better off investing the cash you have because the return will be greater than the amount of interest you pay on a mortgage. If you get a mortgage at 6%, but you can invest your money and earn an 8% return, you just made 2% on your money, not to mention the money you will receive after you sell the home. You can make far more money by obtaining a mortgage and making wise investments with your cash.
Big advantage: Low cash flow requirements. Since you could use the cash to make the payments, of questionable value
Big disadvantage: No leverage. Since leverage is what makes real estate such a fantastic investment (as long as you don’t go overboard), this is like taking your queen and both rooks off the board at the start of a chess game.
There are times when buying for cash is a good idea. But not often.