BUYING A HOME
Exchange of contracts is an important stage in a property purchase and normally takes place before completion. For a buyer using a mortgage, the mortgage arrangements need to be sufficiently progressed for the transaction to proceed safely.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
What does exchange of contracts mean?
In England and Wales, exchange is the stage at which the buyer and seller exchange signed contracts through their conveyancers and the transaction generally becomes legally binding. Property law and terminology differ elsewhere in the UK.
This is general information, not legal advice. Your conveyancer or solicitor can explain the legal effect of exchange and the requirements for your transaction.
Do I need a mortgage offer before exchanging contracts?
A buyer relying on mortgage finance would ordinarily want the mortgage arrangements confirmed before becoming legally committed to the purchase. A mortgage offer can contain conditions and does not remove the need to check that the transaction and borrowing remain capable of proceeding.
What happens between exchange and completion?
The arrangements are completed through the conveyancing process.
Exchange to completion: a simple sequence
01 — Exchange takes place
The purchase becomes legally committed in accordance with the transaction.
02 — Completion arrangements are finalised
The conveyancer prepares for completion and coordinates the required funds.
03 — Mortgage funds are requested
The conveyancer normally deals with requesting mortgage funds in accordance with the lender’s requirements.
04 — Completion takes place
Purchase funds are transferred and ownership changes through the legal completion process.
How long is there between exchange and completion?
There is no universal period. Exchange and completion may be separated by a period of time or, in some transactions, happen on the same day. Timing depends on the transaction and arrangements agreed through the conveyancing process.
What happens to the deposit at exchange?
A contractual deposit may form part of the exchange arrangements, but the amount and treatment depend on the transaction. This is separate from the buyer’s overall mortgage deposit or equity contribution.
What if my mortgage offer expires between exchange and completion?
This can create a significant issue because the buyer may already have entered into a legally binding transaction while relying on mortgage finance. Anyone concerned about timing should speak promptly to their conveyancer and mortgage adviser or lender as appropriate.
What if my circumstances change after exchange?
Relevant changes to circumstances can potentially affect mortgage arrangements even after exchange. Speak to the relevant professionals promptly rather than assuming the mortgage remains unaffected.
Can exchange and completion happen on the same day?
They can in some transactions, although whether this is suitable or possible depends on the circumstances and conveyancing arrangements.
Can a mortgage adviser help before exchange?
A mortgage adviser can help with the mortgage side of the transaction and lender requirements within the scope of their service. The legal decision and process surrounding exchange is handled by the conveyancer or solicitor.
Exchange of contracts and mortgage FAQs
What does exchange of contracts mean?
Do I need a mortgage offer before exchange?
How long is there between exchange and completion?
Can I exchange and complete on the same day?
What happens to my deposit at exchange?
What if my mortgage offer expires after exchange?
Can a mortgage lender change its decision after exchange?
What happens if my circumstances change after exchange?
BUYING A HOME
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