Q: What are the benefits of buying home cash and how does one afford to do this?
A: There are several benefits to purchasing a home with cash. Beyond saving the cost of interest charges, buyers will also stand a better chance of having their offer accepted by the seller – especially when the seller is in a hurry to sell.
These sellers might even be willing to accept a lower cash offer over a higher offer pending home finance approval. However, finding the necessary funds to afford a cash offer is no easy feat. Unless the buyer has inherited a large sum of money or has recently sold a business for a large sum of money, finding enough available cash to purchase a home without any credit can be complicated.
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My advice is to start small and work your way up. If the goal is one day to purchase a home in cash, I would suggest starting with an affordable home in a desirable suburb that will grow in value and can be paid off within five to 10 years.
Once the house is paid for in full, the homeowner can sell it and use the whole amount, plus the profit generated from the sale, to purchase a new home in cash. The alternative to this is to save aggressively to afford to purchase a home in cash from the very outset.
My advice to those who attempt this method is to find the most affordable place to rent while saving up to purchase. – Adrian Goslett, regional director and chief executive of Re/Max of Southern Africa