Cash Financing: A Closer Look

Pros of Cash Financing

1. No Monthly Payments

Purchasing a home outright with cash means you don’t have to worry about monthly payments or interest. You own the property in full from the moment the transaction is complete, free from any long-term financial commitments to lenders.

2. Faster Purchase Process

Cash transactions are generally quicker because there’s no need for loan approval, paperwork, or bank involvement. This is ideal for buyers who want to close the deal swiftly without delays.

3. Negotiation Leverage

Cash buyers often have stronger negotiating power. In many African markets, sellers prefer cash transactions, which can sometimes lead to better pricing or terms in competitive markets.

4. Payment Plans Are Common, but Risky

In Africa, even cash purchases are often spread out over a payment plan lasting 3 to 5 years. This might seem like a flexible option, but it comes with serious risks. One major concern is that if the builder fails to complete the construction or deliver the unit, there is no insurance to protect your deposits. This makes cash purchases in the form of extended payment plans not only expensive but potentially risky.

5. Tied-Up Capital

Paying in cash requires a significant upfront investment. This can tie up a large amount of your money, leaving you less liquidity for other opportunities or emergencies. If something goes wrong, such as construction delays or project failure, recovering your investment can be challenging.

6. Lack of Protection

Unlike mortgage financing, cash purchases in Africa don’t come with safeguards like insurance or protections against builder failure. If the property isn’t delivered, you risk losing any deposits paid during the construction period.

Mortgage Financing: A Safer, Streamlined Option

Pros of Mortgage Financing

1. Preserve Cash Flow

With a mortgage, you can spread the cost of the property over time, keeping more of your cash available for other investments or emergencies. This financial flexibility can be especially beneficial when purchasing a home abroad, where unexpected costs may arise.

2. Simplified, Digitized Loan Application

Rehani makes the mortgage process hassle-free for diasporans. We digitize the entire loan application process, eliminating the paperwork and back-and-forth typically involved in securing a mortgage. By connecting directly to your US financial institutions and credit files, we streamline the approval process, saving you time and effort.

3. One Application, Multiple Lenders

Instead of visiting multiple banks and filling out paperwork for each, Rehani offers a single digital application that connects you to all the banks in our network. This means you only need to apply once, and we handle the rest—submitting your application to multiple African lenders, ensuring you get the best financing terms available without physically visiting each bank.

4. Leverage and Protection

Mortgage financing allows you to use leverage to finance your property while keeping your capital safe. Additionally, a mortgage offers more security compared to extended payment plans common with cash purchases. With Rehani, you can avoid the risk of losing deposits due to construction delays or builder failure, as the mortgage process includes protections against such risks.

Cons of Mortgage Financing

1. Interest and Fees

The primary downside of taking out a mortgage is the added cost of interest over time. Depending on the country, mortgage interest rates in Africa can be higher than those in the US. Additionally, you may encounter fees such as closing costs or insurance that come with financing.

2. Approval Process Without Rehani Can Be Lengthy

Traditionally, getting approved for a mortgage as a diasporan can be time-consuming. Local banks may require extensive paperwork, including foreign credit checks and proof of income. However, with Rehani, the approval process is digitized and simplified, cutting out the need for excessive back-and-forth communication.

Which Is Right for You?

Both cash and mortgage financing have their advantages and challenges, but for US-based diasporans, mortgage financing often provides a safer, more flexible, and streamlined option. Here’s why:

• Cash purchases: May seem straightforward, but in Africa, they usually come with extended payment plans that can stretch over several years. These plans are often risky because there is no insurance protecting your deposits should the builder fail to deliver the property.
• Mortgage financing: Through Rehani, on the other hand, gives you the financial flexibility to spread payments over time while preserving your capital. It also comes with built-in protections and a simplified, fully digitized application process that eliminates paperwork and back-and-forth communication with banks.

With Rehani, you have access to multiple lenders in Africa through a single application, making the mortgage process seamless and secure. We connect directly to your financial institutions in the US, helping you avoid the risk of lost deposits and ensuring you get the best possible financing terms without leaving your home.

Conclusion

For US-based members of the African diaspora, purchasing property in Africa can involve deciding between cash financing and a mortgage. While cash purchases offer the benefits of no monthly payments, faster transactions, and stronger negotiating power, they often involve extended, risky payment plans with no insurance to protect deposits. This ties up capital and exposes buyers to potential loss if projects fail.

On the other hand, mortgage financing provides greater flexibility and security, preserving cash flow and spreading costs over time. Rehani simplifies the mortgage process by digitizing applications, connecting buyers to multiple African lenders with one submission, and offering protections against builder delays or failures. Although mortgages come with interest and fees, Rehani's streamlined approach makes it a safer, more efficient option for diasporans, eliminating paperwork and long approval times. Rehani ultimately ensures a secure and transparent home-buying experience in Africa.