Can I buy a house cash?

The phrase 'cash buyer' means that you are purchasing the house with funds that are already in your possession, rather than using a mortgage. You can buy a house with cash rather than 'credit' in this sense. However you cannot buy a house with actual physical cash. The transfer of the property from the sellers name into your name is a legal transaction. In order to comply with their professional and legal obligations to obstruct money laundering and other financial crimes, your solicitor or conveyancer is unlikely to accept the payment in cash. You will need to make a bank transfer so that the source of the funds can be traced.

Can you make an offer on a house without a mortgage?

You are usually expected to have a mortgage in principle to make an offer on a house. You can make an offer without one, but a seller is less likely to take the offer seriously, and may pass you up for another offer from a cash buyer or one with a mortgage.

Is it easier to buy a house without a mortgage?

If you are in the fortunate position of having the full funds for your purchase, buying without a mortgage is easier in the following ways: You could choose to skip surveys and inspections (though you probably shouldn't) No waiting for lender approval No mortgage fees No interest to be paid on the loan No onward chain to delay transaction More attractive to sellers Potential to negotiate a cash-buyer discount However, you may want to consider buying with a small mortgage, because: If you have overstretched yourself financially you may struggle if you face any surprise expenses after purchase You may not have the liquid funds available to make unexpected renovations to your home (especially if the defects obstruct your ability to borrow against the property) Buy-To-Let mortgages come with tax relief on mortgage payments You may not save as much in interest as you could make by placing the funds in higher return investments

How do I buy a house outright?

You choose a property and place an offer in the normal way. Once your offer has been accepted you instruct a solicitor of your choice. Optional: You instruct your surveyor and order the recommended searches. Contract enquiries and negotiations Exchange contract and pay deposit Completion & moving day!

Does it hurt your credit to not have a mortgage?

Buying a house without a mortgage doesn't effect your credit score unless you secure a loan from a private lender. If you are buying with cash or a gift, your credit record isn't updated or reviewed during the process.

We can help whether it is a cash purchase or you're getting help with a loan or an affordable home scheme.

All our fees are fixed, and you will be covered by our No Sale, No Fee Policy.

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Buying a house without a mortgage

by:

Andrew Boast

(Last Updated: 10/06/2024)

Created on:

24/05/2022

Read by:

17,372

6 min read

Can I buy a house without mortgage?

There are various ways of buying a house without a mortgage, such as:

Buying with cash.
A gift from parents.
A private loan from friends or family.
A director loan from your company.
Gradual home ownership (similar to shared ownership).

Being a cash buyer is the simplest because you use your own money. Additional costs and risks arise when sourcing finance from a private lender or an affordable purchase scheme. We explain each scenario step by step.

In this article

Why would you buy a house without a mortgage?

For some buyers, buying with a mortgage is not an option because:

Your credit rating is poor (CCJs, bankruptcy, payday loans, too much credit). Read more - How to get a mortgage when you have bad credit
You don't have a large enough salary.
You don't have a deposit. Read more - Buying a house with no deposit

How to buy a house without a mortgage

1
Buying with cash

You are known as a cash buyer who can buy with someone else or on your own. The conveyancing process is simplified as you don't need to get a mortgage offer, but you do need to prove the source of your cash.

How do I show proof of funds to buy a house with cash? Your solicitor requires you to prove the source of the money you are using to buy the property. This normally comprises 6-12 months' bank statements and supporting evidence of where the money came from.

Can I use cash as proof of funds? While the word cash is used, you cannot use physical cash or Cryptocurrency to buy a house in England or Wales. Read more - How to prove source of funds.

Can I use a gift without a mortgage? You can use a gift from your parents. Another family member would rarely gift a large sum of money without expecting it to be repaid. Even though you're buying without a mortgage, your solicitor needs your parents to sign a Gifted Deposit Letter. Download a Gifted Deposit Letter.

What happens when you don't have a mortgage?

When buying a house without a mortgage, you can skip parts of the conveyancing process that, if you were getting a mortgage, you couldn't. These include:

Conveyancing searches.
RICS survey.
Mandatory mortgage legal enquiries.

It is not advisable because when you come to sell the property, if you sell to a buyer with a mortgage, you may find you can't sell because of an issue that could have been flagged within the above checks. At SAM Conveyancing, our rule is, if a mortgage lender wouldn't do it, why should a cash buyer?

2
A private loan from friends or family

Buying with a private loan means you don't have a mortgage, but you owe money to someone. The process requires:

Proof of ID
Source of funds
Loan Agreement

You'll need a loan agreement to formalise the term, interest and other clauses around how the loan is to be repaid. Read more - How to draft a loan agreement when buying a house?

3
A director loan from your company

You can withdraw a company loan as a director. If over £10,000, you need a board meeting to approve the withdrawal.

The director's loan must be repaid within 9 months and 1 day of the financial year end, or else tax is payable. If the loan is not repaid in that time, the company will have to pay 33.75% of the balance outstanding along with the Corporation Tax charge for that year.

4
Gradual home ownership

A gradual home ownership scheme allows you to buy a house with a company, and over time, you can buy more shares. Your deposit starts from 5%, and you pay rent on the part you don't own, so it is similar to a mortgage; you still have to pay.

The companies offering this type of home buying without a mortgage are Wayhome and Heylo Housing.

What are the risks of gradual home ownership? Whilst they are mortgage free, this doesn't mean they are free to use. The companies charge for the rent, and you may lose your home if you have financial difficulties. You must read the terms and conditions very carefully..

Frequently Asked Questions

CASH

OFFER

EASIER

OUTRIGHT

CREDIT

Written by: Andrew Boast

Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.

Reviewed by: Caragh Bailey

Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.

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