When making the decision to buy a property, one of the main questions that arises is, finance with a loan or pay in cash? This decision will always depend on the financial liquidity you have, however, here we show you what the advantages and disadvantages of each of the options are, so that you can decide the most suitable alternative for you.
Advantages of paying cash
• You do not need to apply for a loan.
• Reduction of additional expenses
• No worries about bank approval.
• The process usually goes faster.
• Your offer is more attractive to sellers.
Disadvantages of paying in cash
• Fewer options to make your investments, after having allocated your money to a single property.
• Your investments grow much more slowly, since you will have to save for many years to buy with cash.
• It can be a problem in the future if you need that money.
• Less benefits than expected, in case of not having the amount of money according to the price of the property.
Advantages of paying with financing
• Have adequate financial fluidity.
• Flexible and affordable monthly installments
• You will not have to contribute 100% of the total purchase
• Growth can be much faster.
• Opportunity to improve credit history.
• Cash flow may be higher.
• You can diversify your investments.
Disadvantages of paying with financing
• Less purchasing power and less attractive purchase proposal.
• Greater competition in the market
• It is a long-term obligation and you must comply
As you can see, there is no single way to do things, the right thing to do is to find out about the available methods and apply the concept that suits you best.