Can you really buy a home without a bank loan?

Is it true?

Can you really buy a home without going to a bank for a loan?

 

That’s kind of a loaded question. But the answer is definitively Yes with a ‘But’….

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There are certain home owners who may be happy to let you pay off the entire price of a house under certain terms.
They might be happy to let you pay it off over say 10-15 years. Some might even be happy to give you a ‘private loan’ for the same 30 year term as the bank!
However, these terms may not suit the average ‘mum & dad’ home owner, as the repayments are could be quite high. The math is simple; shorter term equals larger payment chunks, longer term equals smaller payment chunks, but the seller carries some risk, so they will naturally want to be compensated for this.

But… and here is the But I referred to earlier: You can buy a house and start paying it off without a bank loan, BUT usually the agreement with the seller is that you will need to complete the transaction within a few years. To do this you need to either;

a) win the lottery
b) receive a sizable inheritance
c) borrow the money

The likelihood of the first two options happening is low, so it’s probably better to plan to borrow. This will usually be from…..a bank!

Having some extra time, which could be anything between 6 months and 5 years for a Rent To Buy, should be enough for you to sort out whatever is currently preventing you from getting a loan. And in the meantime you are still paying off the house, not lining your landlords pocket with dead rent!

 

So did you actually Buy Without A Bank?

Well, according to some, that may be open to debate, but you certainly were able to start the process of owning without a bank. You were able to sign a piece of paper that says you have all the rights to the title of the house, providing certain ‘Vendor Finance’ conditions are met. And you were able to move into a place that you can call your own and start paying it off, before you had to get the bank’s ok to do so. You don’t do that if you are just renting!

 

The point is this, you certainly don’t need a bank to start owning a home. So why limit yourself to buying a home the ‘traditional’ way, or restrict yourself to renting, when you can give yourself a head start and start owning right now?

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3 Comments

  1. Premium Mortgage Solutions
    Premium Mortgage Solutions

    I am sure Option A, winning the lotto is everyone’s preference 🙂

    March 30, 2014 at 6:45 pm Reply
  2. Jan
    Jan

    Google defines “Buy” as ‘Obtain in exchange for payment.’
    Does it matter what process you use to “obtain” the house, as long as in the end you own it?

    May 20, 2014 at 9:19 am Reply
  3. Chris B
    Chris B

    Uhhhh
    To do this you need to either;
    a) win the lottery
    b) receive a sizable inheritance
    c) borrow the money

    What about option d) Save for a few years???
    Saving for 10 years, at the same rate what a normal loan payment would be. And invest it, after 10 years you will have enough to buy a decent home…

    September 7, 2016 at 7:03 pm Reply

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