What’s the difference between exchange and completion when buying a home?
You’ve found your dream house, had the survey done and your offer’s been accepted, now it’s just the exchange and completion to tick off before the house is officially yours.
Key takeaways
Exchange is the point at which the sale becomes legally binding, preventing either party from withdrawing without significant penalties
Completion is the final step where the buyer takes possession of the property, and all legal and financial aspects of the sale are concluded
The time between exchange and completion typically ranges from one to two weeks, though it can vary
What is exchange and completion?
Exchange and completion are the final steps when buying a new home:
This is the point at which the sale of a property is legally binding, and neither the buyer nor seller can pull out without hefty penalties. It’s basically the last stage of the purchase before the actual sale goes ahead.
This is the very last stage of all. The property passes to its new owner, you have access to your new home, and everything is finalised. At completion, you’ve officially bought your house.
Difference between exchange and completion
Exchange
Completion
What does exchange mean when buying a house?
The term ‘exchange’ in a house purchase refers to the exchange of contracts between the buyers’ and sellers’ solicitors. At this point, the sale is legally binding. The buyer is obliged to buy, and the seller is obliged to sell and abide by the conditions in the contracts.
Both the buyer or the seller are able to pull out of the sale at any point before the exchange takes place – but if they do so afterwards, there are steep penalties. As a buyer, for example, you would’d lose your deposit you have paid.
What happens when you exchange?
You don’t need to be present for the exchange – it’s handled by your solicitors or conveyancers.
The two sets of solicitors will read out their contracts in a recorded conversation, usually over the phone, ensuring that both the buyers’ and sellers’ contracts are the same. If all parties are happy, it’s signed off, and the solicitors post the contracts to each other.
At this point, you as the buyer will need to:
Pay the deposit to the seller
Be available for a quick phone call with your solicitor to confirm you’re happy to exchange that day – everyone making the purchase will need to do this
What does completion mean when buying a house?
Completing means you have officially bought your property. The purchase is legally finalised, money is sent, and ownership is transferred to you.
If you’re part of a chain, all properties will ideally complete on the same day. The date is usually set in advance to suit everyone.
What happens when you complete?
All purchase monies are transferred at this point, including the mortgage. Your solicitor will also send a letter of completion to confirm everything.
This is the day you can collect the keys and access your new home. The purchased property must be vacant and available for your possession by 1pm that day.
If you’re not a first-time buyer, and are also selling your home, this is the day you’ll need to move out of your sold home and into your newly purchased one.
How long does it take between exchange and completion?
It usually takes between one to two weeks between exchange and completion, but it can vary depending on your situation.
For very simple purchases with no chain, it can be a lot shorter, sometimes even the same day.
On the other hand, if there’s a much longer chain to organise, the time between can be up to four weeks. This allows everyone to make their moving arrangements at a time that suits them.
What happens between exchange and completion?
There are a few tasks to be done between exchange and completion, mostly by your conveyancers/solicitors:
Both sets of solicitors run some final checks – the buyers’ solicitors make sure the property is still available in the same condition, and the sellers’ solicitors make sure the buyers’ finances haven’t had any serious changes (such as bankruptcy)
Your solicitor registers the transfer of ownership with the Land Registry
If the property is leasehold, the solicitors inform the freeholder of the new owner – or if it’s a share of a freehold, they arrange for a certificate
You pay your solicitors’ final bill, which includes the mortgage, arranged by your mortgage provider
This is also the time to buy home insurance, which is sometimes required by a mortgage lender
In some cases, buyers are also allowed to start building works on their new property at this stage. Many contracts have a clause for ‘key undertakings’, which normally allow for works that need to be done before you can move in (for instance, major renovations or fixing anything notably dangerous). This would be discussed beforehand.
Our other useful guides
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Whether you’re looking for a fixed-rate, a tracker, or a discount mortgage, our mortgage comparison tool can help you find a great deal for you.
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Use our mortgage re-payment calculator to see what your repayments will be based on how much you’re borrowing, the interest rate and fees of the deal, and how long you will have to pay it off for. You can also use our mortgage affordability calculator to find out how much you could borrow.
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