What is the difference between exchange and completion when buying a home?

Exchange and completion are terms that are thrown around by estate agents and solicitors; but quite often the two get confused.

To exchange on a property means that the purchase becomes legally binding. Completion on a property purchase is when the buyer becomes the legal owner of that property.

Here we explain the key difference between exchange and completion and what to expect at each stage.

What does it mean to exchange on a property?

When you exchange on a property, both parties (buyer and vendor) are legally obliged to follow through with the purchase. Up until this stage the buyer or the vendor can withdraw from the process without incurring serious costs.

This is the point where both solicitors will swap signed identical contracts and the buyer will pay a deposit, which is usually 10% (in some instances this will be the full amount).

If the vendor challenges the purchase price at this point you should seek advice from your solicitor.

What needs to be done before exchange?

·       Make sure all relevant searches by the conveyancing solicitor have been carried out

·       Make sure you have your mortgage offer confirmation in writing

·       Ensure all funds for the deposit are available

·       Make sure you have read and understood the contract your solicitor sends before signing and returning

·       Ask your solicitor to explain any conditions or terms you don’t understand

·       Check that all fixtures and fittings included in the offer are in the contract

·       Ensure you have an Energy Performance Certificate (EPC) for your new home

·       Take out buildings insurance and make sure it’s valid from the exchange date

·       Agree on a completion date 

What happens between exchange of contracts and completion?

Exchange and completion can happen on the same day, however there is often a week or so in between (we will explain in more detail further down). The time between exchange and completion is your time to pack and prepare for your move.

6 things to think about between exchange and completion:

·       Agree on a time when the vendor/s will move out and you will move in

·       Book a removals company to help you with your furniture

·       Arrange for a transfer of services with your broadband provider

·       Redirect your post and send out change of address notifications where relevant

·       Take a photo of your utility readings (water, gas and electric)

·       PACK! Don’t forget to clearly label the boxes to make unpacking a much easier job 

What happens when you complete on a property purchase?

This is the exciting part – the day when the full payment is complete (if this wasn’t fully paid at exchange) and you legally own the property! Your Estate Agent will give you the keys to your new home and you are free to move in.

What can go wrong on completion day?

Occasionally there may be problems with the transfer of funds on completion day. If the money transfer doesn’t go through by 3pm, the completion will be put on hold until the next working day. This is usually only a risk when there is a big chain involved.

Can I exchange and complete on the same day?

Yes! Exchanging and completing on the same day is ideal for cash buyers, no chains and when both parties are looking for a quick transaction. Some lenders require a minimum period of five days between exchange and completion, so please be sure to check.

There are risks involved here, such as searches not being received and last-minute issues with the mortgage. This is why many home movers prefer to keep a week or two between exchange and completion to avoid any last-minute problems.

If you have any questions please feel free to contact your local branch.