In this brief guide, we are going to answer the question “Can you exchange contracts without a completion date”.
Can you exchange contracts without a completion date?
No, you cannot exchange contracts without a completion date. Before the exchange of contracts takes place you and the seller will have to agree on a completion date.
Your conveyancer will usually help you with this.
Once you have agreed on a completion date with the seller, your conveyancer and the seller’s conveyancer will continue their pre-completion checks.
Once you have exchanged contracts there are many things which could happen which could cause a delay to when you finally complete on the house
One of the most common things is being stuck in a chain.
If you are in a chain then you may find that it takes a bit longer to complete on a house purchase even if you have already exchanged contracts.
The seller may request a much later completion date to allow them to buy a new property before they move out of the property you want to purchase.
The time between exchange of contracts can be anywhere from a few days to a month.
You should ensure your completion date stays within your mortgage offer validity period if not you will be forced to go back and get another mortgage offer from a mortgage lender.
What is the exchange of contracts?
The exchange of contracts when buying or selling a home is when the transaction becomes legally binding. At this point, the sellers and buyer exchange signed copies of the contracts. After the exchange of contracts, the next major step is the completion of the property purchase
There is no requirement on how long it can be between completion and exchange and it will be up to you and the seller to agree a suitable time which meets both of your needs.
For an exchange of contracts to be legally binding there will have to be a consideration. This is usually the exchange deposit.
The exchange deposit is about 10% of the property.
Until you exchange contracts the purchase of a home is not legally binding and both parties can still pull out of the house sale.
Once the exchange of contracts has taken place both parties will not be able to pull out of the sale without serious legal repercussions.
What is the completion of contracts?
Completion of contracts during a home purchase is when the rest of the funds on the property are transferred to the seller and the home sale is now complete.
Your conveyancer will usually request the mortgage funds from the mortgage lender and then send it on to the seller’s conveyancer.
Once this happens, ownership has now officially passed over from the seller to the buyer.
On the date of completion, you will physically own the property.
Your conveyancer will then need to notify the land registry and register you as the new owner of the property.
You will also need to pay whatever stamp duty is owed by filing a stamp duty return.
Your conveyancer will help you with this too.
FAQs: Can you exchange contracts without a completion date
Do you need a completion date to exchange contracts?
Yes, you need a completion date to exchange contracts but if for any reason you need this date to be much later you can inform your conveyancer who will agree on a much later completion date with the seller or their conveyancer.
How long after the exchange of contracts is completion?
There is no time limit on how long after exchange of contracts you will have to complete. This is negotiated between you and the seller but you should be mindful that you complete within your mortgage offers validity period.
Usually, you may complete within 2 weeks after exchanging contracts but if there is any complication or issues found then this may get delayed.
What happens if you exchange and don’t complete?
If you exchange contracts but don’t complete then you may have some legal liability and you could potentially lose any money or deposit you have paid down.
Use a mortgage broker
You may want to consider using an independent mortgage broker to get a mortgage.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.
If you have any questions or comments please let us know.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.