When it comes to buying a property, you can go down one of two routes: you can either buy it upfront or take out a mortgage to pay off the property over time.
Both routes will be costly, but of course, you’d expect that when buying a house! Undoubtedly, paying upfront will cost you a lot more money at the time of purchase, however, getting a mortgage will cost you more money in the long run.
It’s likely that you’re going to have to pay the price that’s on the tag when purchasing with cash, whereas a mortgage will allow you to take out a loan and pay it back over a long period of time.
If you can afford it, buying a property upfront is a great investment. It doesn’t matter whether you’re planning to live in the property or use it as a buy to let in Manchester, getting yourself on the property ladder can put you in a great financial position in years to come.
In the majority of situations, you’ll have the upper hand over someone who’s taking out a mortgage if you’re buying with cash. One of these reasons is down to your reliability.
From the viewpoint of a seller, if a cash buyer approaches you and makes an offer, it’s hard to say no. One reason behind this is that it would be a quick sale. There is no chance of your buyer getting caught up in the property chain as they have the money there and then.
‘Getting stuck in the property chain’ is when a property is being sold and the buyer cannot move in yet as they are waiting for their home to be sold. As you can imagine, this chain can go on and on.
Also, a cash buyer will not have to pass any affordability checks, as they already have everything in place. They can proceed right away!
Moving home in Manchester can already be stressful enough, especially when the process starts to slow down. A cash buyer can only speed up the process, not slow it down. The mortgage process can sometimes bring trip-ups and hurdles along with it, particularly in specialist situations.
Equally, buyers taking out a mortgage can speed up the process too if they’re prepared. This means having an agreement in principle in place, being credit checked and had an affordability assessment carried out and early as possible.
A mortgage broker in Manchester like us can help you with this. In a lot of cases, we see mortgage applicants shoot through the moving home process just as fast as a cash buyer would.
When you take out a mortgage, you are taking out a loan. This loan is a huge financial commitment; it’s likely to last well over 20-25+ years. With a cash offer, you are avoiding owing money back.
You also won’t receive interest on your offer, as you’re paying with cash. If you had a mortgage, the interest would possibly push up your monthly payments.
When you don’t have the funds in place to make a cash offer, your next choice is to take out a mortgage.
Instead of using your life savings on a property purchase, you have the choice to save that money and take out a mortgage. Both options result in the same thing! And, depending on your credit score, obtaining a mortgage may only require 5% of the property’s value as a deposit.
You’ll pay back a mortgage in monthly instalments. This allows you to pay back a bit at a time and in some cases overpay if you want to. Monthly costs will vary depending on your interest rate, mortgage product and the property that you’re purchasing.
If you’re viewing properties and the listing says “cash buyers only”, you should be careful with this property. It’s quite likely that the property has something wrong with it. If it is the case that the property is damaged/need repairs, you probably won’t be able to get a mortgage on the property anyway. You could be dodging a bullet if you are choosing a mortgage over cash here, as a cash buyer may be buying into a bad property.
Despite not having to, we’d always recommend that you get a property survey carried out on the property you’re planning to buy. This applies to both cash buyers and mortgage applicants.
Diving into a purchase blind could put you at a slight disadvantage to someone who has a mortgage advisor in Manchester by their side. Your advisor will make things as simple as possible when helping you through your moving home process.
We aim to deliver a fast and friendly advice service. A mortgage broker in Manchester could be the thing that you need to get you through your moving home process. Get in touch with our team for a free consultation.