Competition on the UK’s booming housing market has reached a point where prospective buyers are turning to alternative funding solutions to beat competing bidders to the punch. Breaking free of conventional property chains has always been a major advantage enjoyed by cash buyers, but outright purchases now also paving the way for enormous savings.
According to research conducted by GetAgent.co.uk, some sellers are willing to reduce the asking prices on their homes by as much as £150,000, if sold outright to a cash buyer. Having analysed actual property selling prices for cash buyers and those who take out mortgages, major differences in affordability were evident.
Specifically, GetAgent found that the average asking price for a property in the UK was around £256,000. By contrast, average prices for homes listed by those seeking cash buyers came out at £186,000. This equates to savings of around £70,000 on average (or 27%), simply for purchasing a property outright, without using a traditional mortgage.
Unsurprisingly, the biggest discounts for cash buyers were found to be available in and around London. Average property prices in London currently stand at around £486,000, according to GetAgent’s analysis. Meanwhile, sellers looking exclusively for cash buyers are listing their properties for sale at an average of £335,000. This adds up to a saving of more than £150,000 for anyone able to purchase a home for cash.
There were also some significant savings to be found in the South East of England, where cash buyers stand to save more than £82,000 on average than those purchasing properties with mortgages. Average savings of £70,000 were also recorded in the South West of England, followed by almost £69,000 for cash buyers in the East of England.
GetAgent’s analysis found that the lowest price-cut for cash buyers came in the North East, but purchasing a property outright could still result in a discount of almost £36,000.
Frantic Competition Among Competing Bidders
Speaking on behalf of GetAgent, Co-founder and CEO Colby Short highlighted the relentless pace of the UK’s real estate sector.
“Although the market has showed signs of cooling after what has been a manic pandemic property boom, the current landscape is still frantic, to say the least, and there remains a very high level of buyers looking to transact,” he said.
As a result, sellers are still accepting offers at an alarming speed, but there remains some lengthy delays when it comes to getting a sale through to completion.”
“One way of bypassing this to an extent is with a cash buyer and it seems as though some sellers are willing to dramatically lower their asking price in order to secure this easier path to completion.”
Bridging Finance for Cash Property Purchases
For existing homeowners looking to relocate, bridging finance provides an affordable access point to the benefits of outright purchase.
With bridging finance, a loan can be secured quickly and easily (often within a few days) against the borrower’s current home. This money can then be used to purchase their next property for cash, beating competing bidders to the punch, and escaping the traditional property chain.
Interest is added at a rate of around 0.5% per month and the facility is repaid in full when their previous home sells. With average savings of £70,000 on the cards for cash buyers, buying a home with a bridging loan could pave the way for a significantly more affordable transaction.
Just as long as you have enough equity tied up in your current home to fund the purchase of your next home, you could benefit from all the perks and privileges of a cash buyer.