What happens after exchange of contracts when buying a house?
When buying your home one of the critical points referred to by everyone is ‘exchange of contracts’. But what is it and why is it important?
Too many people still think that once they have their offer accepted on a property they have bought it. Sadly, it’s not that simple. In fact, this is just the start of a process which can be long-winded and frustrating.
After agreeing terms, the lawyers get to work. They will need to undertake searches, prepare the contract for sale, arrange the mortgage offer and acceptance with your mortgage adviser and generally formalise the process so that it is (i) legally enforceable and (ii) does not leave you exposed to foreseeable risks.
It is really only once you have entered into a contract to purchase (or sell) that you are committed. Your lawyer should make sure this does not happen until all the necessary formalities have been completed. He or she will then ask you to sign the contract. He can exchange without you physically signing if you agree to let him do so, but most times a signature is required. The other side will also sign their copy of the contract.
Once both parties have signed contracts, the lawyers may exchange. The buyer’s solicitor will normally transfer a deposit to the seller’s solicitor at the time of exchange and this deposit is usually 10% of the purchase price. It is important to know that once the contracts are exchanged, any non-returnable deposit paid is likely to be at risk if the buyer does not proceed with the purchase.
Exchange of contracts is, therefore, when you become committed to buying and the seller commits to selling to you. The subsequent completion of that contract is the actual sale and at that time the remaining purchase monies are paid over to the buyer’s solicitor by your solicitor and you will receive the keys. Now you own the place!
How long do exchange of contracts take?
Exchange of contracts usually takes between 4 and 8 weeks from the date the purchase is agreed. Most contracts for the purchase of a modern freehold property are no more than a standard piece of double-sided A4 paper with the names of the parties, the title number and the purchase price included. However, the background work undertaken during the conveyance can be more time consuming to complete.
Related Articles:
Download our Free First Time Buyers Guide
Recent posts
The average age of a first-time buyer in the UK is two years older than 10 years ago. This is understandable with managing the cost-of-living and challenges within the economy such as high interest rates making it difficult to get onto the property ladder.
Delayed Start Mortgage from Skipton
6 days ago
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
Gardening Tips for Beginners
11 days ago
If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.
The Family-Backed Mortgage from NatWest
14 days ago
High street lender, NatWest, have launched a new product to help first-time buyers purchase a property with assistance from a family member or friend to get them on the property ladder sooner.
The Impact of Klarna on Mortgage Applications
15 days ago
‘Buy Now, Pay Later’ (BNPL) schemes, such as ‘Klarna’ are short-term loans that allow shoppers to make a purchase, but delay paying for it for an agreed amount of time.
Klarna is one of the most popular BNPL services with 18 million customers in the UK alone, and offers interest-free payment options which is appealing to shoppers. However, does it affect a mortgage application?
Buy to Let mortgages: what's happening?
20 days ago
We look at how to get the best Buy to Let mortgage rate, what's in store going forward, and options as a landlord with increasing costs.
UK mortgage rates following Trump’s Tariffs
14 Apr 2025
Throughout this past week, lenders have continued to reduce their mortgage rates giving borrowers in the UK some welcome news following the change in global tariffs under US President, Donald Trump.
Effective ways to relieve stress
14 Apr 2025
Did you know that buying a house, or relocating is in the top 10 most stressful life events?
Stress of course is an unavoidable part of life and there are many reasons why people experience stress, not just buying a house!
There are lots of effective ways to manage and reduce stress, check out our tips to help you.
More information
Trusted by
