Buying a home
Exchange and completion
By Joe Elvin
Article 13 of 13
Exchange and completionIt’s always exciting to have an offer on a property accepted, but nothing is guaranteed until you've exchanged. Here, you can find out what's involved in exchanging and completing on your new home.
Exchanging contracts and getting to completion on a property can be a hard slog, especially if you’re in a chain. Nevertheless, there are things you can do to make it less painful.
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Exchange of contracts is when the signed contracts are swapped between the two legal firms representing the buyer and seller, and a deposit is paid by the buyer. This is the point at which an agreement to buy or sell becomes legally binding.
Once everyone in the chain has exchanged, no one can back out of the deal.
However, delays still often occur on the route to exchange. All of the following stages need to be completed for you to exchange contracts so, if you are responsible for any of them, completing them promptly will help to speed up the process:
- Your solicitor/conveyancer will lodge an interest in the property, allowing you to pay the seller and lodge your application to the Land Registry to transfer the deeds into your name.
- They will also carry out local searches to gain information from the local authority on planning and environmental matters that might affect the house you're buying.
- The fixtures and fittings form and property information forms filled in, checked by the buyer and signed by the seller.
- If you're buying a leasehold property, you'll need any key information about the lease, such as special clauses prohibiting pets and subletting.
- Survey findings (if one's been done) and details of any resulting actions or negotiations.
- Other negotiations in writing (eg on fixtures and fittings).
- A written mortgage offer for the buyer.
- Contracts for sale and purchase drawn up by the seller's solicitor.
- Completion date agreed by both parties.
- Buildings insurance put in place by the buyer.
When buying a house, you become legally responsible for the property’s buildings insurance once you exchange, so you will need to have this arranged, and pass the policy number and a copy of the policy to your legal firm.
It is worth asking the vendor who their policy is with, as you may want to continue with that insurer. This is a particularly good idea if the property is in a flood-risk area or has subsidence problems, as the insurer will already have details on the building and associated risks.
Find out more: Home insurance reviews – see which companies are rated best by customers
Setting a date for completion
When you exchange contracts, you should set a completion date. A legal firm can be sued if they fail to meet that date, so they have a strong incentive to meet the deadline.
Completion dates are typically set two weeks after exchange, but they don’t need to be. If no one in the chain is in a hurry to move, you can ask for more time.
Four weeks or more means you have greater time to organise a removals company, dispose of any items you don’t need to take with you, pack, arrange any essential works for your home and change of address information.
Also, the few days after you move into your new property are an ideal time to change any superficial decoration you don’t like, put up new cupboards, curtains and some familiar pictures, and clean out anything that isn’t up to your standards. So if you are able to arrange a couple of days between completion and moving in (maybe with your belongings going into storage), you can get a lot more done in an empty property.
When setting a completion day, it is also a good time to check that you don’t owe any money to the mortgage lender or the loan company who lent you money based on your property, if you are selling for less than the money you owe.
Unless someone is going into rented or borrowed accommodation, everyone in the chain either moves house on completion day, or a day or two after.
Try not to complete on a Friday, because conveyancing and removals firms tend to be booked up on that day, and, also, if there are delays with finances, you could be stranded for a weekend and end up paying for your goods to be stored.
Find out more: Moving house checklist - get prepared for the big move
It's very rare for completion and exchange to happen at the same time. Your role in completion is to wait for a phone call from your legal representative telling you all is well and that you can go ahead with moving in.
Completion is when the remaining money is paid by the buyer and the mortgage company to the seller. You'll get the keys to your new property on completion day.
The money will be paid from:
- the funds from the person buying your house
- your new mortgage loan
- your own cash.
The money is transferred electronically between the legal firms’ bank accounts, each one triggering the next transfer. This all takes time, and if you are near the top of the chain, the system may run out of time in transferring funds, so have a contingency plan for where you could stay overnight if you have handed over the keys to your house and have nowhere to go.
Find out more: Packing and preparing to move house - get everything in place for moving day
Making your next move easier
The first thing to do once you’re settled into your new home is to file all the paperwork to do with the process of buying it.
This will help you make judgements about how to do it better next time and, also, importantly, help you retain the information for when you try to sell your property again. This file will hold essential information when you come to sell, even if it’s not for 10 years. So include in it:
- the sale particulars of your home
- the EPC
- your buildings and contents insurance
- estimates from builders and tradesmen for work to be done
- safety certificates, warranties and guarantees
- correspondence and notes about your agent, survey, legal firm and mortgage.
- Last updated: December 2016
- Updated by: Joe Elvin