What is the exchange of contracts?
One question we always get asked, and one many first-time buyers are unaware of is “what exactly is the exchange of contracts?”
It may seem like a confusing thing to get your head around, but it really shouldn’t be, it’s a routine process in every house sale.
We’ve put together this blog to try and help you make more sense of the matter, and to find out exactly what it means to have the contracts exchanged…
What is it?
This is the point where you are legally bound to purchase the property, otherwise, you will be breaking the contract and it will cost a lot of money to get out of it.
The exchange of contracts is where you set a completion date for the deal to be done by or for you to move in, and this is set in stone.
Once all the parties have agreed on the contracts and have them signed, then they will be exchanged so everyone has a copy.
Is it the same as a completion?
It differs slightly to completion, so it is worth noting that these two are not the same and usually take place at different times of the purchase.
The exchange of contracts is when the purchase becomes legally binding, and all that awaits is the completion.
Completion is effectively your moving in date, and its when the legal ownership of the property is 100% yours, rather than just in principle.
How long is it likely to take to exchange?
If needs be, the exchange and the completion of the sale (handing over the keys) can even happen on the same day in certain circumstances. You may need to move in immediately as your house has sold or a seller may need to move quickly to ensure payment and purchasing a new property that they have their eye on.
Solicitors on average ask you to expect a week between the exchange of contracts and completion of the sale, but this, of course, can change.
Before the contracts can be exchanged and completion can be done, a solicitor may want to also see proof of buildings insurance as a minimum. As part of the conditions of your mortgage contract, you always will need buildings insurance. As well as these its good idea to get income protection and critical illness protection started as well as the buildings insurance, to make sure you’re fully covered.
If you need to know more about the exchange of contracts or any other steps in house buying, then talk to us at Warrington Mortgage Centre and we’ll be more than happy to advise. We can be reached on 01925573328.
Our team of experts have multiple years of experience in the mortgage field and have helped many customers move homes smoothly and efficiently.