With the constant call to be money savvy, it makes sense to try to save up for the things you want. To some, this also means to save up for the big-ticket items, like a new home. Buying a house is one of the biggest investments that most people make in their lifetimes. But is it worth putting in a cash offer to buy that dream home?
Is It Worth Waiting For?
Saving up to put a cash offer on a house can possibly be a huge exercise in patience. These are the things we have discovered when comparing a cash offer with applying for a loan:
Having the available funds
Saving money to buy a home is not simple. The easiest way to build this kind of fund is by saving everything you can. Gift money, inheritance and bonuses can go a long way when saved in an interest-bearing account. Cut down on spending and cancel all unnecessary accounts.
Cash is king
Cash offers can often be a deciding factor for a seller. Sellers tend to lean towards cash offers, especially when it is an urgent sale. Offering cash speeds up the entire sale process. It also saves the buyer from additional costs like bond and registration costs. Cash offers mean that no loan application is needed, and your credit score does not get affected.
It is vital that cash buyers consider the financial implication for the period after the sale has gone through. Buyers must remember that there are costs involved in maintaining a home. Repairs, unexpected breakages, and monthly costs such as rates and levies can surprise many new homeowners. When buying with cash, you need to ensure that there are more available funds in case of an emergency. Also consider that all your cash is tied to a single asset, leaving you little chance to invest elsewhere. However, it is critical that you remain within your budget and consider buying smaller.
So, what is the best course of action?
Considering all the pros and cons of buying a home with a cash offer, the ideal way forward would be:
Save, but for a larger deposit instead of buying a home outright.
In other words, put yourself in a position where you would rather put down a larger deposit. This means that you will not tie down your financial options, while easily managing a down payment. A large deposit will not take as long to save for. It will also allow you to apply for a much smaller loan, giving you much more financial freedom.
It might even be worth considering putting two deposits down on two different houses if your finances allow it. If your goal is to build a portfolio, this might be a better option while renting out one or both. This qualifies you for tax deductions on your rental properties and the possibility of better returns on your investments.
The Milkwood Townhouse Complex is a brand-new development that’s ideal for first-time buyers looking to get into the property market. Situated in the idyllic Kuils River suburb, it offers a safe environment for your family. Buy direct from the developer to enjoy further savings and cut down on your total costs. Kindly contact one of our agents if you are interested in booking a viewing appointment.