Eli5<- what are the pros/cons of borrowing money from the bank vs paying cash when buying a house?

Question

And why would it ever be a good idea to borrow if you can pay cash and pay no interest to the bank?

In: 18

Answer 1

Paying cash can save a lot of interest, and is usually cheaper in the long run (but not always, depending on inflation, house prices and interest rates). It also means you will immediately own the property outright and you can’t be ousted by the mortgage provider in the event you cannot meet your mortgage payment obligations.

The main advantage of borrowing is that it enables someone to buy in the first place, as property prices are usually prohibitively expensive without a mortgage or loan.