In this brief guide, we are going to answer the question “ What can go wrong between exchange and completion? “.
If you are planning on buying a house then you may be interested in knowing what could possibly go wrong between exchange and completion to ensure you are well prepared for any eventualities.
What can go wrong between exchange and completion?
A lot of things can go wrong between exchange and completion e.g
- The house could burn down, fall due to structural issues or be vandalised
- You could find Japanese knotweed or other serious issues
- The mortgage lender could withdraw their mortgage offer
- House prices could fall
- The seller could pull out of the sale.
- You could lose your job
- The mortgage lender could revise their mortgage offer
In some of these cases, you can prepare for these eventualities but in some cases, you are simply a pawn on the chessboard and you must wait it out before deciding your next move.
We will elaborate on all of the things above which could go wrong between exchange and completion.
The house could burn down, fall due to structural issues or be vandalised
Between exchange and completion, the house could burn down due to a fire, be vandalised by thieves or simply fall down due to structural issues.
Whilst these are things that have certainly happened to others, there is no way of predicting when these sort of things could occur but there are a few steps you should take to ensure you are well covered.
You should get home insurance prior to an exchange and this will cover you if anything should happen to the house between exchange and completion.
Most mortgage lenders may insist you have home insurance before completion and there are some that will require you have it at the exchange of contracts but getting home insurance before the exchange of contracts will be your best bet to avoid any of the issues mentioned above seriously affecting you.
You could find Japanese knotweed or other serious issues
Another thing that could go wrong between exchange and completion is that you could find other serious issues such as damp, Japanese knotweed or structural issues at the property.
This may give cause for concern and have you wondering if you should indeed go ahead with the property purchase or not.
The easiest thing to do in this instance is to contact your conveyancer and discuss your options with them.
It may be the case that the sale contracts allow you to pull out of the same with no cost to yourself if such issues are detected.
To prevent things getting to this stage you should try and have a property survey before you commit to buying a property.
A property survey will check for these issues and if these issues are found later on you may be able to sue the surveyor for compensation.
The mortgage lender could withdraw their mortgage offer
Another thing which could go wrong between exchange and completion is that the mortgage lender could withdraw their mortgage offer.
This could be for a variety of reasons including:
- The property price is inflated and hence the loan to value on the mortgage is incorrect
- A final credit check before completion revealed some troubling issues.
- A fraud check from the mortgage lender revealed a CIFAS warning
There are a variety of reasons why a mortgage lender will withdraw their mortgage offer. In some cases, they will inform you of why they have made this decision but in others, they may not.
If you have a mortgage broker, you could ask your mortgage broker to make inquiries as to why your mortgage offer was withdrawn.
House prices could fall
Another thing which could go wrong between exchange and completion is house prices could fall.
House prices could slowly or rapidly fall due to a change in the UK’s economic situation.
The issue with house prices falling is that the mortgage lender may require you to undergo a new mortgage valuation which could make you ineligible for the mortgage.
You may also not want to buy a house which is now overpriced and hence you may want to consider pulling out of the sale.
The seller could pull out of the sale
Another common issue which most buyers face is that they could be gazumped and the seller could pull out of the sale due to having a much better offer on the property.
If this is the case, then the seller should refund you your exchange deposit and you may be able to claim compensation from them for other costs such as:
- Removal costs
- Moving costs
- Mortgage interest
- Lost income
- Mortgage fees
You could lose your job
Another thing which could go wrong between exchange and completion is that you could lose your job.
If you lose your job between exchange and completion you should inform your mortgage lender as soon as possible.
keeping this information away from them could be classed as mortgage fraud.
If you lose your job you will usually not be able to afford the monthly mortgage repayments except you have sufficient savings.
Taking on the mortgage in this position may be very risky.
if you are not certain you will get a new job in minimal time then you should inform the mortgage lender.
The mortgage lender could revise their mortgage offer
The mortgage lender could also revise the mortgage offer.
They could do this if your circumstances change before you complete on the mortgage or if their lending criteria changes before you complete on the mortgage.
What can hold up exchange of contracts?
There are various things which could hold up the exchange of contracts, some of these include property chains, slow sellers or slow conveyancers.
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.
In this brief guide, we answered the question “ What can go wrong between exchange and completion? “.
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.