Exchange and Completion: What These Mean When Buying a Home

If you are buying a home for the very first time, chances are that you keep hearing lots of terms and phrases that you may not have come across before. To clarify what many of these mean for you, we have put together our guide to the house buying process, which clearly explains what typically happens at each stage of the first time buyer journey.

As a first time buyer, the stages of the journey that you will be most looking forward to are ‘exchange’ and ‘completion’ - two of the most final steps towards finally owning your own home! In this blog post, we take a closer look at them to help you understand the difference between exchange and completion, and what you really need to know.

What is ‘exchange of contracts’, and what happens at this stage?

The word ‘exchange’ refers to the exchange of contracts between you as the buyer, and the seller. On an agreed date, your solicitor will exchange your signed contract to buy the property you want, with the seller’s contract to sell it to you, and you pay your property deposit. Once the contracts have been exchanged you are both legally bound to the deal, and neither of you can pull out – at least, not without incurring some very significant costs.

The exchange of contracts process actually begins after your offer is accepted  on the property. Your solicitor will draft a contract for you, which will include information such as the list of fixtures and fittings that are included in the property (such as kitchen appliances, carpets and curtains), the results of local searches that they carry out, and if you decided to conduct a home buyer’s survey  on the property, any negotiations or actions that the sellers must take as a result of the findings. This contract will be sent to you to read, sign and return – and if you have any questions or concerns regarding anything in your contract, it’s important that you raise these with your solicitor as soon as possible.

 

What happens on completion day?

After your contracts have been exchanged, you will agree a completion date for the purchase of your first home. The main difference between exchange and completion is that at exchange you become legally bound to buy the property and at completion you effectively pay for it.

What happens in the time between exchange and completion is that your solicitor arranges for the money to be transferred from your mortgage provider to the seller on completion day. There is no minimum or maximum time between exchange and completion and in some very rare cases they can take place on the same day – but it’s wise to use this time to prepare for moving day, so you may wish to allow 1-2 weeks so you can finish packing and make final arrangements such as booking a removal van.

Once you receive confirmation that your purchase is complete, you can pick up your keys from the estate agent. In other words, the property is yours – it’s time to start enjoying your very first home!

If you are liable to pay stamp duty on your property, you have 30 days from the completion date to pay this. You can find out everything that first time buyers need to know about stamp duty in our blog post here .

Should you have any further questions about the process of buying a home, or questions about mortgages with Newcastle Building Society, one of our qualified mortgage advisers would be delighted to speak with you. Call us now on 0345 606 4488, or book an appointment at your local branch now.

Your mortgage will be secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.