The final stages of the homebuying process are known as ‘exchange’ and ‘completion’. Exchange is what happens when your solicitor has carried out all the necessary searches and enquiries and contract terms have been agreed.
The buyer signs a copy of the contract which is passed to the seller, and the seller signs a copy of the same contract which the buyer receives. Contracts are exchanged by the solicitors, and from this point the buyer is legally obliged to buy the property and the seller legally obliged to sell.
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On exchange of contracts the buyer puts down a deposit of 5 or 10 per cent of the purchase price, which they pay to their solicitor. This can be sent from their bank either via BACS, which takes three to four days, or via CHAPS, which takes place the same day.
This commits them to the purchase of the property. At this stage you should check that you have a formal mortgage offer in writing which you have read and understood; if you use a mortgage broker, they will make sure this is the case. Your solicitor will let you know if there is any additional money for you to pay, and you should ensure this is paid to your solicitor ahead of completion.
All set
The completion date is set when the contracts are exchanged, so now is a good time to finalise packing and moving plans, including booking a removal firm. There will also be various matters for the buyer to deal with in the run-up to completion, such as documents to sign and payments to be made including Land Registry fees and stamp duty. Your solicitor will tell you what you need to do.
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Meanwhile your solicitor still has some work to do. On exchange, searches called OS1 are carried out at the Land Registry; these are done to protect the interest of the mortgage lender in the property at the Land Registry, says Danielle Pitchford of Mulderrigs Solicitors, It puts the property on a notice period, which means that no one can come along and register any kind of caution or charge or restriction on the property that will jeopardise the lender’s or the client’s position.
The solicitor then collects the value of your loan from your mortgage provider ahead of completion day. On completion day, your solicitor transfers the funds to the vendor’s solicitor. If you have an existing mortgage and are completing on the sale of your property the same day, the solicitor will also handle the transfer of monies involved with this, paying your existing mortgage off and transferring any leftover money to you or using it towards your new purchase.
The buyer does not have to do anything to initiate the transfer of money on completion – the solicitor should do everything.
Moving day
Completion day is the day when your solicitor will have completed the purchase on your behalf and the property is vacant for possession. Normally about lunchtime your solicitor will call you to inform you that the transaction has completed and you are free to pick up the keys and move in.
If the completion date is not met then the party who causes the delay is charged interest on the purchase price for every day that they delay it for, says Pitchford.
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When the transaction has completed, the Transfer Deed – the document confirming you as the owner – is sent to the relevant registry for an update to the title showing you as the new owner.
The buyer has very little to do between exchange and completion, apart from ensuring they transfer any funds they are putting down to their solicitor on time, says Melanie Bien, associate director at independent mortgage broker Savills Private Finance. There will be a telegraphic transfer fee to pay so that funds can be securely transferred the same day – this is in the region of £30. Your broker will liaise with the solicitor to ensure the mortgage offer is available on time and that everything is going according to plan. If any problems emerge, they can also chase the estate agent or the solicitor, which can make life much easier for the buyer.
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