At this point, you’ve gone through most steps in the process and know a lot about the property you’re buying. The point of exchange is legally binding (see Step 9 – Exchange contracts) so it’s important to be certain you want to go ahead before signing anything. ✍️
However, there are several things that need to happen first. It’s crucial to keep in regular contact with your solicitor at this stage, so that everything runs as smoothly as possible.
Get your financial ducks in a row
- Organise your exchange deposit – Reaching ‘exchange’ is an exciting time! For exchange to happen, you’ll be required to transfer 5-10% of the property value to your solicitor. Don’t panic if your overall mortgage deposit is 5% though, as you won’t be expected to transfer any more than this. If your overall mortgage deposit is more than 10%, you’ll usually pay the remainder on completion. Speak to your solicitor if you have any concerns about this.
- Transfer your deposit funds ASAP – Transferring funds to your solicitor as early as possible will ensure they are ready for exchange. If you have a Lifetime ISA, get in touch with your provider as soon as you can – they can help you and your solicitor with the relevant forms to withdraw your funds. If you have a Help to Buy ISA, ask your provider to close your account and provide you with a closing statement. Your solicitor will need to claim your bonus before your completion date.
- Check you’ve got your written mortgage offer – It’s time to dig out your mortgage offer, which you received earlier in the home-buying process, to ensure it’s still valid.
- Double-check your contract – Read your contract one last time, to confirm you’re happy with all the terms of the sale, including the fixtures and fittings. If you have any final questions, now is the time to ask your solicitor. In Scotland, this stage is known as the ‘conclusion of missives’. Read more about the home-buying process in Scotland.
- Arrange your buildings insurance – Check with your solicitor when you’ll need to take out buildings insurance. For some properties, it must be in place from the day you exchange, while for some new build properties, it doesn’t need to be in place until completion. If you’re buying a leasehold property, it might be included in your service charge, so double check this.
- Sign, seal and deliver your documents – Your solicitor will send you a copy of the contract to sign. You’ll need to get this ‘witnessed’ – co-signed by someone who isn’t a relative and doesn’t have any financial interest in your property. Send this back to your solicitor, along with any outstanding documents.
Once all the above steps have been completed, you’ll find out when you’ll be exchanging contracts. It’s also a good idea to start discussing a completion date at this stage – the day you’ll get the keys. This can help to focus everyone in the chain on a target date, however, it’s a moving target until it’s set in stone at the point of exchange.
The race to exchange
Until you exchange contracts, you or the seller can pull out of the transaction for any reason, without any serious legal or financial consequences. It’s in everyone’s interests to jump this final hurdle as soon as possible. If you’re in a property chain, the solicitors will wait to exchange contracts until every person buying and selling a home in the chain is happy to go ahead. A delay anywhere along the chain – for example, with your seller’s new home – can have a knock-on effect on all the transactions, including yours.
🟠 Time for a check in!
- Your deposit funds are available and ready for exchange
- You’ve got a valid mortgage offer
- You’ve read through your contract in detail
- You’ve organised your buildings insurance
- You’ve asked your solicitor any final questions
- You’ve signed and returned your copy of the contract
Moneybox Mortgage Advice is provided by Moneybox Mortgages Ltd.
Your home may be repossessed if you do not keep up repayments on your mortgage.