One of the most common questions we receive at We Buy Any Home is: what’s the difference between a cash buyer versus a mortgage buyer?
It is an important question with lots of sub-sections to consider. Firstly, there are pros and cons to both routes, and whichever one you eventually opt for, you should always be aware of the opportunities (and drawbacks) that the other one might bring.
So, what are the key differences between these two types of buyers? We’ve outlined all the main things you need to know in the blog below.
What’s the Difference between a Mortgage Buyer and a Cash House Buyer?
A mortgage buyer is someone who purchases your property using a mortgage to borrow money from the bank. They will then usually repay this amount back to bank over a long period of time, with interest. This is a very common method of buying properties throughout the UK – it is often referred to as a traditional ‘on the market’ buyer.
On the other hand, a cash house buyer is usually an organisation which purchases your property for cash, up-front. In most cases, this company will make a reduced offer compared to what you might receive from a mortgage buyer – but they will also be able to complete in a time frame of your choosing, and with far less fees.
In most cases, a mortgage buyer is an individual, whereas a cash house buyer is a company (although this is not always the case, as some solo property developers can still buy houses for cash up-front).
When might a Mortgage Buyer be more appropriate?
A mortgage buyer will usually be more appropriate when you are not in a rush to sell your property, and when the market is in a strong condition. For example, if you are not in a chain (you can move out at any time of your choosing, due to, for example, having a second home) and there are lots of buyers on the market, then it will usually be a good idea to sell using this traditional method. When the market is strong, you will typically receive higher offers on your property, and might therefore make a larger profit on your house.
When might a Cash House Buyer be more appropriate?
A cash house buyer might be more appropriate when you need to sell your house within a short time frame. In this instance, a cash buyer can guarantee a quick sale in a way that a traditional mortgage buyer cannot, and therefore this route may seem more attractive.
Furthermore, a cash house buyer might be more appropriate when you are keen to sidestep the paperwork and hassle involved with a mortgage sale. Cash house buyers do not use estate agents and often pay your legal fees for you, and this results in a much smoother and less stressful sale.
How likely are deals to fall through?
When you sell your property to a mortgage buyer, there is always a considerable possibility that the sale might fall through. If they are operating within a chain, it only takes someone else to pull out and suddenly the entire thing can be put into jeopardy.
On the other hand, cash house buyers can guarantee a sale because they are chain-free and are using their own funds.
Selling a property which is not in optimum condition
When you sell on the market to a mortgage buyer, you will almost always need to ensure the property is in great condition for a sale to take place. Most new owners don’t want to take on the challenge of renovating a property as soon as they move in – and therefore, you need to make these improvements before you sell.
With a trustworthy cash buyer, you can sell your property when it is not in optimum condition. The most reputable firms, like We Buy Any Home, will buy any type of property in any condition, and therefore this is ideal if you are trying to sell a derelict property or one which simply needs a lot of work.
Choosing who gets to move into your home
If you have been living in your property for a long-time, or have become very attached to it, then it is only natural that you care about who moves into your house next. When you sell to a mortgage buyer, you can meet the people who will move in and feel satisfied that your home is going to owners that you approve on.
On the other hand, selling to a cash buyer means that you will be unlikely to meet whoever purchases the property in the future. While this is not an important detail for some people, for others it is a huge dealbreaker – so you should decide whether you care about meeting the new owners when choosing between these two routes.