How long does it take to exchange contracts and complete the buying process
Exchanging contracts on a house is a significant milestone in the buying process. It’s the moment when you know you are definitely going to buy the property. However, the time before completion can vary. Here’s our guide to what happens before, during, and after the exchange of contracts, and how to prepare for the completion date.
Getting ready to exchange contracts
Getting ready to exchange contracts happens only when all the legal and financial aspects of the purchase are in place. Key steps include:
- Agreed purchase price: The buyer and seller have agreed on a price.
- Mortgage offer: The buyer has a formal mortgage offer and deposit funds ready.
- Searches completed: The buyer’s solicitor has completed all necessary searches.
- Completion date: An agreed completion date is set.
- Energy performance certificate: The EPC has been reviewed.
- Fixtures and fittings: All included items have been agreed upon.
- Buildings insurance: The buyer should have arranged and confirmed buildings insurance.
Exchange of contracts
What does exchange of contracts mean?
The exchange of contracts is when the buyer and seller swap signed contracts, making the sale legally binding.
When does exchange of contracts take place?
Exchange typically occurs between 5-28 days before completion, with an average of about 10-14 days.
What is an exchange deposit and what’s it for?
The exchange deposit, usually 10% of the purchase price, is paid by the buyer to confirm their commitment. It is non-refundable and can be claimed by the seller if the buyer pulls out after exchange.
How long does exchange of contracts take on the day?
The actual exchange process can take a few hours. Each solicitor reads out their client’s version of the contract, and then the contracts are exchanged by post. The transfer of funds can also take several hours.
Finalising the purchase
Setting a completion date
The completion date is when all funds are transferred, and the sale is finalised. The size of the property chain can impact the ease of setting this date. Flexibility may be required, especially in larger chains. Availability of your removals company can also influence this date.
What happens when you complete?
Completion day can feel like a nail-biting wait as all funds are transferred to the seller. Once everything is confirmed, you'll get a call from your estate agent saying it's time to pick up the keys and finally move into your new home.
Essential tasks for completion day
Ensure these are ready for completion day:
- Confirm all funds are in place
- Book your removal company
- Ensure buildings insurance covers your new property
- Double-check the contracts
- Know where to collect the keys
Frequently asked questions
Can I exchange and complete on the same day?
While possible, it’s uncommon to exchange and complete on the same day due to the numerous financial, legal, and logistical steps involved. Most solicitors prefer a gap of at least 5 days.
Can I back out after exchanging contracts?
Changing your mind after exchanging contracts can have serious repercussions. Once you've exchanged, you're legally committed to buying the property. If you, as the buyer, decide to pull out, you're in breach of contract. The seller can issue a 'Notice to Complete', which gives you 10 days to finalize the purchase. If you don't complete within this timeframe, the seller has the right to keep your deposit, which is typically 10% of the purchase price.
Additionally, the seller can claim compensation for any losses incurred due to your withdrawal. This could include legal fees, additional mortgage payments, and even the cost of finding a new buyer. It’s a stressful and costly situation for both parties. Therefore, it’s crucial to be absolutely certain before you exchange contracts. Once the contracts are exchanged, backing out is not only difficult but also very expensive.
What are the costs involved in exchanging contracts?
Exchanging contracts typically requires a deposit of 10% of the purchase price, although first-time buyers may negotiate a 5% deposit. There are no extra charges for exchanging contracts on a house; these are covered by the conveyancing solicitor’s total fees.
Can I exchange and complete without a solicitor?
It’s technically possible but highly impractical to exchange and complete without a solicitor due to the complex legal transactions involved. It is strongly advised to use a qualified solicitor.
Contact us to start your property search
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