Once the scene is set and all the paperwork is complete, contracts can be exchanged. You can breathe a sigh of relief after this happens! Reaching the point of exchange is a huge achievement. 🙌
What is the exchange of contracts?
Swapping signed copies of the contract with the seller via your solicitors is known as the exchange of contracts. 🔄 To exchange, both solicitors will confirm that both contracts are identical, with no discrepancies. They’ll normally read out the contracts on a recorded phone call and send copies to each other immediately after.
Once this has happened, the transaction is legally binding for both you and the seller. The seller is contractually bound to sell the property, and you are contractually bound to buy it. It’s rare that either of you would pull out of the transaction after exchanging contracts. As a buyer, you would lose your deposit if you pulled out of the sale now. You could also be sued for breach of contract.
What is an exchange deposit and why is it necessary?
For exchange on a property 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. Talk to your solicitor if you have any concerns.
Can I exchange and complete on the same day?
It is possible, provided your lender allows this, but it may make the process more stressful. Your lender might prefer a longer window to run their checks and transfer funds. It’s normal for there to be a seven to 28 day window between exchange and completion.
What happens after I’ve exchanged?
Now that you’ve exchanged, it should be fairly smooth sailing from here on. You’ll need to do some final admin:
- Confirm a completion date that works for everyone in the chain, via solicitors
- Hire a removals firm for your moving day (you can move in later than your completion date if you choose)
- Notify the freehold owner (if you’re buying a leasehold property)
- Inform your bank, utility companies and other providers of your new address
- Organise a postal redirection to your new home
All your hard work is about to pay off, so another thing you might like to do is get the champagne on ice! 🥂
🟠 Time for a check in!
- You’ve exchanged contracts with the seller via your solicitors
- You’ve confirmed your completion date
- You’ve hired a removals company, if using one
- You’ve told everyone who needs to know that you’re moving
Moneybox Mortgage Advice is provided by Moneybox Mortgages Ltd.
Your home may be repossessed if you do not keep up repayments on your mortgage.