You put in your offer and… then what next? After your offer has been accepted by the homebuilder, next comes the Exchange followed by the Completion.
These are your typical property jargon phrases that forecast a lot of bureaucracy. Exchange and Completion do require a lot of organizing and phone calls but most of them are handled by your solicitor or conveyancer. Plus it is needed to finally call the house you’ve been dreaming about yours.
In this guide, we will explain how the Exchange and Completion work exactly as well as share what you can expect your timeline to look like.
Exchange & Completion – What Is The Difference
You hear these terms in conversations together so much that it is difficult to tell them apart. In some rare cases, they even happen on the same day… However, they mean something very different.
Exchange: The Exchange of Contracts (Exchange for short) is the time from which the purchase is legally binding. Both the seller and the buyer have now contractually agreed to make good on the transaction or face legal (and financial) repercussions.
Completion: Completion is the day you have been waiting for from the beginning. It is the day you finally get the keys to your new pad. All transactions are legally binding, there is no turning back. The date of the Completion will be agreed upon at the Exchange beforehand.
How Much Time Passes Between The Two
The time between the Exchange and the Completion varies a lot. It is agreed upon by the seller and the buyer before the Exchange. It usually takes about 2-4 weeks after the contracts have been exchanged to do the Completion.
In rare cases, the two can happen on the same day – usually for cash purchases where there is no chain. We will say, however, that pushing for this is risky. Just imagine, you have organized everything – all your stuff is boxed up and the moving company is ready to start packing – only to have the purchase fall through at Exchange… You don’t want to draw that kind of pressure on yourself.
That being said, you also don’t want to prolong the time between the two. While having time to get ready for your move is great, you don’t want to wait forever. Keep in mind that mortgage offers are usually valid for 3 to 6 months. You don’t want to get anywhere close to this deadline.
So what factors really influence the time between the Exchange and the Completion? Quite a lot actually…
- How long the mortgage process takes
- The final date of construction – if you move into a new build
- Current accommodation of the two sides (e.g. you might want to stay at hotel mum and dad until your home is ready)
- Availability of the parties (e.g. you most probably will need to take time off for the Completion Date)
Deciding On The Completion Date
Let’s turn back for a sec to the Completion Date. After all, without setting it, the legal machine stops working. You cannot Exchange without having a completion date (agreed to by all parties) as it has to be included in the contract.
Okay, but who decides the exact date? Well, it has to be a mutual decision. Both the seller and the buyer have to agree to it. This might require some back-and-forth from the parties so you’d want to start the discussion as soon as possible. Settling on a Completion Date usually happens weeks before the Exchange so that the solicitors have time to finalize the contract.
What Happens Exactly During The Exchange
In the past, the solicitors actually met in person at a physical location. Nowadays, the actual Exchange gets done over the phone. The solicitors read the contract to each other and check whether both parties have exactly the same document. During the call, they also need to confirm that the signed contract and funds for the deposit are available.
If you are part of a chain, the process is a bit trickier. All parties in the chain will exchange contracts on the same day. This means that the solicitors of all parties need to be available until all parties exchanged in the chain.
The Exchange date is especially important as everything is legally binding from this point on. If a party pulls out from the deal, they need to reimburse the other side for any costs they incurred because of it (e.g. surveys or other legal fees).
What Happens Between Exchange And Completion
This is going to be a very busy period for you. You need to make sure that you have the time and the headspace to complete the tasks ahead of you. We listed the main tasks for you below.
Moving related chores:
- Research & later hire a removal company
- Make sure you have enough boxes & packing materials
- Pack up your life – literally, your entire life
Utilities & insurance:
- Transferring the services and utilities to your name (you need your Wifi in the new pad too…)
- Make sure the building insurance is in place – from the moment you exchange contracts, you are responsible for any damage to the house
- Notifying services (e.g. your back and the post) that your address will change
- Letting family & friends know about the new address (you wouldn’t want to lose out on those greeting cards)
- Taking time off for the move
While you are working away at this list, loads of things are happening in the background. The mortgage company transfers the monies, the final completion statement is getting crafted and your seller is getting ready to leave the property as well.
Don’t worry though, most of the mortgage side of things are behind you. Only in rare cases can you expect a credit check from your lender after the Exchange.
What Can Go Wrong Between Exchange And Completion
Even though the contract is legally binding from the date of the Exchange, there are a number of reasons why the purchase can still fall through between that date and the Completion Date.
- Your mortgage offer being withdrawn
- You or your partner losing your job
- Logistical issues
Though rare, your mortgage offer might be withdrawn or changed. Possible reasons for this would be a drastic decrease in the value of the house or the bank discovering a last-minute error in your application.
From your side, the loss of your job is probably the biggest hindering factor. If this happens, you need to report it to your mortgage provider straight away. Otherwise, you might be implicit in mortgage fraud. Keep in mind, however, that your bank could redraw or revise the mortgage offer. They might fear that you won’t be able to make the necessary monthly payments.
Finally, there are factors that could delay the Completion. These include logistics – e.g. not being able to arrange the removal and packing process properly by either you or the seller. If you are in a chain, that could also complicate things further. For example, a buyer in the chain might miscalculate either time or their finances.
Keep in mind though, that while problems do happen, most Completions go smoothly once the Exchange was successfully executed.
What Happens Exactly On Completion Day
Woohoo! You made it: this is the final step for moving into your dream home. Completion is when the ownership of the property is officially transferred to you. It is the day you’ve been waiting for. You can actually hold the keys to your new home in your hands.
The solicitors play a role in this day as well. The solicitor on the seller’s side needs to confirm that they received the purchase price in full. After this, they can inform their client that it is moving time. The seller then usually hands over the keys to the estate agent.
This exchange will normally take place until 1 pm, so you, the buyer, have the whole afternoon to collect the key and get your stuff to your new home.
Quick heads up before you get all giddy from the prospect of unpacking in your dream home: you do need to make sure that the necessary admin & financial chores are in motion. As the new owner, it is your responsibility to pay the Stamp Duty (Land and buildings transaction tax in Scotland and Land transaction tax in Wales) and that the house is registered with the Land Registry.
All in all, Exchange and Completion is the end of your house buying journey. No more searching no more offers to be made. There are a couple of things that could still go wrong between the two, but they are rare. After you exchange the contracts, give or take 2 weeks, and you will be able to finally hold those glorious keys to your very own home.
If you are looking to finally have a house that you can call your own, browse our properties. Our selection of new builds is perfect for first-time buyers.