Paying in cash when purchasing a property sounds ideal for many. On the surface, buying a property in cash seems to be an incredible option to be able to buy your own home without requiring external financing, but if you have the necessary capital to do it in cash, you should do a deep analysis and consider all the factors before jumping in to invest all your capital at once.
On the one hand, it could mean a good level of savings by being able to get discounts with real estate agencies when you think i will buy house by selling an old one, but if what you are looking for is to make a real estate investment and not buy to live, it may not be the best decision.
On this occasion, we will review the pros and cons of purchasing a property in cash so that you can analyze the issue and decide if it is the right option in your case.
The advantages of buying a property in cash
1. Non-payment of interest or bank commissions
By purchasing in cash you will completely avoid commission and interest charges. When buying with a mortgage loan, you will always end up paying much more than the initial price of the property since there is a monthly interest that financial institutions charge for lending you the money. Additionally, you would be tied to their property insurance and mandatory lien insurance.
Also, paying the total amount of the goods at once will allow you to ensure their current price, preventing external variables, such as interest rates that vary depending on the country’s economy, from increasing it (as is the case of those who take loans with variable rates and not fixed).
2. Opt for a better price through attractive discounts
Imagine the amount of money that real estate agencies invest when constructing buildings… of course, it is a lot! There is no doubt that it is one of their highest priorities to recover this money to pay their own debts and construction loans with the banks, so they will always be willing to give attractive discounts to those who want to pay them 100% of the money in cash.
Contrary to what many believe, the money when purchased with a mortgage loan does not reach the real estate agencies very quickly but rather goes through a long process in which the property is deeded, the papers are reviewed, and it is registered with the property conservator roots, is released and finally deposited. Although most of the time the cash is left with notarial instructions as a voucher, and is paid only at the time of registration of the property with the Real Estate Registrar, the effective payment to the real estate agency will always be faster than in the case of a credit.
Because sellers give preference to buyers who offer cash payment, you will be able to negotiate a better price since the seller will want to receive the money as quickly as possible.
3. You will be able to make effective use of your home much faster
By paying in cash you will be able to have the keys to your property in hand much faster, since you do not have to go through the entire credit application process at financial institutions and once you make the payment the property is registered in the conservative, it will be yours.
4. Greater feeling of financial stability in your family
Acquiring a property for cash also provides relief to the family’s finances, generating a feeling of tranquility, security, and stability. Not having debt is always satisfying and good; you stop worrying about paying the monthly dividend, what happens if you are renting it and for some reason, you are left without tenants for a period, etc.
