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Exchange and completion

It’s exciting to have an offer on a property accepted - but until you've exchanged contracts, nothing is guaranteed. Find out what's involved in exchanging and completing on your new home.

In this article
What does 'exchanging contracts' mean? Preparing to exchange contracts: who does what? When does exchange take place? What is an exchange deposit? How long do exchange and completion take?
Setting a completion date What happens when you complete? Once you've moved in Frequently asked questions Get personal help with your mortgage, from initial research to completion

What does 'exchanging contracts' mean?

Exchange of contracts is when the two legal firms representing the buyer and seller swap signed contracts, and the buyer pays a deposit. 

At this point, an agreement to buy or sell a property becomes legally binding: once everyone in the chain has exchanged, no one can back out of the deal.

In this guide, we explain what everyone needs to do before you exchange, typical timelines and processes, and what's actually involved in exchange and completion.

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Exchange

Preparing to exchange contracts: who does what?

Once an offer has been accepted, several things need to be done before contracts can be exchanged. It's vital that you're proactive, organised and communicative in order to avoid hold-ups and to reduce the risk of the sale falling through.

The buyer should...

  • Commission an independent house survey to check for any serious issues with the property, and consider negotiating repairs or a reduced price with the seller depending on the findings.
  • Obtain a written mortgage offer - Which? Mortgage Advisers (0800 197 8461) can help you with this.
  • If you're buying a leasehold or share of freehold property, carefully read the lease and raise any questions or concerns with the solicitor.
  • Arrange buildings insurance, which needs to be in place from the date of exchange. If the property is in a flood-risk area or has subsidence problems, it's worth asking the seller which company they use as that insurer will already have details on the building and associated risks. Let your solicitor know what your policy number is.
  • If you have a Help to Buy Isa, let your provider know that you're about to buy a property so they can request your government bonus (see below for more on this).
  • When your solicitor sends you the results of the searches (checks on the property and surrounding area), ask about anything you're concerned/unclear about.
  • Sign the contract and any other documents and return them to your solicitor promptly.

The buyer's solicitor or conveyancer should...

  • Ensure that any repairs that the seller has committed to make to the property (for example, if the house survey has revealed a problem) are noted in the contract.
  • Complete local searches to check for any planning or environmental issues.
  • If it's a leasehold property, go through the lease with a fine-tooth comb.
  • Raise queries relating to the results of the survey, searches or terms of the lease with the seller's solicitor and explain everything to the buyer.
  • Check the contract and send it to the buyer for signing.
  • Agree on a date of completion with the seller's solicitor.
  • Arrange to pay an exchange deposit on the buyer's behalf.

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The seller should...

  • Await the results of the house survey and prepare to negotiate based on the findings. 
  • If you haven't already done so, gather the paperwork for any work you've had done on the house - you might be required to supply proof of planning permission, for example - and, if applicable, the lease.
  • Fill in all the necessary forms, including the property information (TA6) and fixtures and fittings forms (also known as the fittings and contents form - TA10).
  • Inform your buildings insurance provider that you're moving and cancel the policy, and arrange a new one for the property you're moving to from the date of exchange.
  • Obtain a mortgage statement and arrange finance for your new home, if applicable.

The seller's solicitor or conveyancer should...

  • Fill in and check the relevant forms with the seller, then send them to the buyer's solicitor.
  • Answer any queries raised by the buyer's solicitor.
  • Obtain the title deeds and details of anything remaining on the seller's mortgage.
  • Draft a contract for the sale, noting any work that the seller has committed to make to the property (for example, if the house survey has revealed a problem) in the contract, and send it to the buyer's solicitor.
  • Agree on a date of completion with the buyer's solicitor.

Find out more: how to choose a conveyancer or solicitor

When does exchange take place?

Once the buyer and seller have all the paperwork in place, contracts can be exchanged.

The buyer and seller will sign identical documents. Your solicitors will then exchange the contracts at a set time - this is the moment when your agreement becomes legally binding and neither buyer nor seller can back out without major penalties. 

Often, exchange takes place over the phone, with both solicitors reading out the contracts. They then immediately mail the documents to one another.

If you're in a property chain, the solicitors will wait until every party in the chain is happy to proceed before exchanging contracts. This means a hold-up anywhere along the line - for example, in the purchase of your seller's new home - could delay all of the exchanges, including your own.

What is an exchange deposit?

When contracts are exchanged, you'll need to pay an exchange deposit to the seller. This is usually 10% of the property price, which might be different from the amount of mortgage deposit you're putting into the property. 

If 10% is too much because, for example, you're buying with a 95% mortgage and only have 5% available before your mortgage completes, your solicitor should usually be able to negotiate the exchange deposit down to 5%.

This might also come in handy if you're relying on the bonus from your Help to Buy Isa to put towards your deposit. Help to Buy Isa bonuses only get paid after exchange, so in this instance you can again ask your solicitor to agree a smaller exchange deposit with the seller's solicitor.

If you've got a bigger deposit than 10%, you'd normally pay 10% at exchange and the remainder when you complete.

What's the exchange deposit for?

Its main purpose is to demonstrate to the seller that you're definitely going to buy the property. If you pull out of the deal after exchange, the seller can sue you to keep the exchange deposit.

If you've paid less than 10%, they could sue you up to this amount in some circumstances, as well as for compensation.

How long do exchange and completion take?

The time between having an offer accepted and exchanging contracts is generally the longest part of the home-buying process and can take anything from a couple of weeks to several months. 

To help speed things along, make sure you're organised, respond to queries quickly and tell the estate agent and solicitor if you're going away.

The good news is that, when you do exchange contracts, the solicitors will agree a completion date. As legal firms can be sued if they fail to meet this date, they have a strong incentive to meet the deadline and so you can be fairly certain you will definitely complete on the day everyone agrees.

Completion dates are often set two weeks after exchange, but this is just a guideline. If no one in the chain is in a hurry to move, you can ask for more time - and, occasionally, people complete in less than two weeks, too.

Leaving a longer gap gives you more time to organise a removals company, pack your belongings, arrange any essential works on your home and change your address information.

Setting a completion date

The amount of choice you'll have on exactly when you complete will largely depend on how many properties there are in the chain and each buyer's and seller's circumstances. The longer the chain, the less flexibility there's likely to be.

However, if your chain is relatively short and you do have some choice over when you complete, it's worth being strategic about it.

For example, if you're able to leave a couple of days between completing and moving in (either putting your belongings into storage or arranging a small overlap if you're currently in a rental property), you can get a lot done in an empty property. Cleaning, redecorating and even hanging curtains are all easier to do before the boxes arrive.

When is the best day to complete?

Almost half of all property completions take place on a Friday, according to 2018 data from TwentyCi.

Completing on a Friday is popular because it gives you the weekend to settle into the property, but Fridays' popularity does also mean that conveyancing and removals firms tend to book up fast. 

More importantly, if there are any financial holdups and your mortgage doesn't end up being paid to the seller on the intended day, you could be stranded for a whole weekend and have to pay for your belongings to be stored.

For these reasons it's worth suggesting a day between Monday and Thursday, when service providers and banks are less busy and you have a buffer if things go wrong.

What happens when you complete?

As a buyer, your role on completion day is simple - you wait for a phone call from your conveyancer confirming that your mortgage and deposit have been transferred to the seller and completion has taken place.

However, this can take a while to happen and things can feel pretty tense before it does.

The money is transferred electronically between the legal firms’ bank accounts, each one triggering the next transfer, and this takes time - especially if you're completing the sale of a previous home on the same day.

If you're near the end of the chain, time may run out before all of the funds have been transferred. It's worth having a contingency plan in place just in case you hand over the keys to your house without a new home to move in to.

Assuming things do run smoothly, you can collect the keys from the estate agent and start moving in as soon as the seller has vacated the property.

Once you've moved in

Once you're in, it's worth filing the property-related paperwork before it gets lost or forgotten about.

This will be a useful resource for any issues relating to the sale, and will also be really helpful when you eventually come to sell the home. If possible, make sure you keep:

  • the lease, if it's a leasehold property
  • the sale particulars
  • the EPC (these are valid for 10 years)
  • your buildings and contents insurance documents
  • estimates from builders and tradesmen for work to be done
  • safety certificates, warranties and guarantees
  • correspondence from your estate agent, survey, legal firm and mortgage.

You'll also need to register with utility providers (and consider switching to save money),and update your address details with banks and other organisations. You can see everything that needs to be done in our moving house checklist.

You may also need to pay a stamp duty bill, which your solicitor will coordinate, though first-time buyers benefit from an exemption in some circumstances. You can use our stamp duty calculator to work out how much you'll need to pay.

Frequently asked questions

 

Can I exchange and complete on the same day?

 

It's possible but rare to exchange and complete on the same day. Doing so enables you to move without delay and means you don't have to pay an exchange deposit.

However, you'll have to be ready to go on the day you exchange, which can be hard to plan in advance. You also won't have much time to fix things if anything goes wrong.

If the seller makes a last-minute demand that holds up exchange, you may be all packed up with nowhere to go, leaving you with little room for negotiation.

This option is less risky if you and the seller are both chain-free, with no other parties involved. It's also easier if you're a cash buyer and don't have to rely on the mortgage lender transferring the funds in time.

Some mortgage lenders will insist on a minimum timeframe between exchange and completion, though others may be willing to allow a same-day transaction.

 

Can I change my mind after exchange?

 

Your contract is legally binding after exchange, and you will face penalties if you pull out.

As the buyer, you could forfeit your exchange deposit (and if you paid less than 10%, you may be required to pay more). You could also be sued, and may have to pay interest on the unpaid purchase price or any additional costs the seller has incurred.

The seller, meanwhile, can be sued for compensation and may need to pay interest on the deposit, as well as the buyer's costs.

 

When do my Help to Buy Isa funds get released?

 

If you're using a Help to Buy Isa to help fund your property purchase, the bonus will be paid after exchange and before completion. 

When you plan to purchase a home, let your Help to Buy Isa manager know. They'll close your account and draw up a closing statement which will allow your solicitor to claim the bonus for you. Whatever you do, don't just withdraw the money yourself, as you won't be able to claim the bonus.

The bonus will be released to your solicitor after exchange, who will then transfer the full sum of money - including the mortgage funds and any other outstanding sums - to the seller's solicitor on completion.

 

How much does it cost to exchange contracts?

 

The process of exchanging itself won't incur a specific charge - it will be included in your solicitor's overall fee. 

You will, however, need to pay an exchange deposit. This is usually 10% of the property price, but is sometimes negotiable - we've explained this in more detail further up the page.

 

Can I exchange and complete without a solicitor?

 

Solicitors are responsible for transferring the title deeds, conducting property searches and making sure you legally own your new home, as well as negotiating the contracts.

Most mortgage lenders will require you to have a conveyancer or solicitor as a condition of their offer.

As a cash buyer, it's possible - but very risky - to buy a house without a solicitor or conveyancer.

If you do try to do it yourself, any errors could mean you don't have legal ownership of the property, or that the sale is not legally binding. You could also owe compensation to other parties involved if something goes wrong. 

Unless you're a legal practitioner, you're unlikely to have the expertise to carry out the conveyancing yourself. 

    Get personal help with your mortgage, from initial research to completion

    You need to have a mortgage offer before exchange can take place.

    For help navigating the mortgage application process and an expert recommendation on the best deal for you, call Which? Mortgage Advisers on 0800 197 8461

     


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