What to do before you exchange contracts

What does exchanging contracts mean?

Before contracts are exchanged, either you or the seller can usually pull out of the sale without major legal consequences.

Once contracts are exchanged:

• The sale becomes legally binding
• A completion date is agreed
• Your deposit is transferred
• You're committed to buying the property
• The seller is committed to selling it to you

Your solicitor will only ask for permission to exchange once they're satisfied that all the necessary checks have been completed.

The home-buying journey

• Offer accepted
• Mortgage application
• Searches
• Survey
• Exchange of contracts
• Completion
• Collect your keys

Exchange and completion can happen on the same day, but there's often a gap of a few days or weeks between the two.

1. Check that your mortgage offer has been issued

Before you exchange contracts, you should have your formal mortgage offer from your lender.

A Mortgage in Principle can give you a good idea of how much you might be able to borrow, but it's not a guarantee that your mortgage has been approved.

Only exchange contracts once your lender has completed its checks and issued a formal mortgage offer.

It's also best to avoid making major financial changes at this stage. Taking out a new loan, financing a car or applying for additional credit could affect your affordability and potentially delay your mortgage.

2. Understand what your survey is telling you

A mortgage valuation and a property survey serve different purposes.

A valuation is carried out for the lender. A survey is for you.

If you've arranged a survey, make sure you've read through the findings and understand any issues that have been highlighted. This could be your last opportunity to investigate concerns or renegotiate with the seller.

Common issues include:

• Damp and mould
• Roof repairs
• Structural movement
• Electrical problems
• Drainage issues
• Timber decay
• Heating or boiler concerns

Not every issue is a dealbreaker, but it's important to understand what work might be needed and how much it could cost.

3. Make sure all property searches have been completed

Property searches can reveal important information that isn't always obvious when viewing a home.

Your conveyancer will usually carry out:

Local authority searches

These can highlight:

• Planning applications nearby
• Proposed road schemes
• Conservation areas
• Building regulation issues
• Environmental searches

These can reveal potential risks such as:

• Flooding
• Land contamination
• Ground stability concerns

Water and drainage searches

These help confirm the property's water and drainage arrangements and identify the location of public sewers.

Before exchange, make sure you've reviewed the results and understand anything that could affect your decision to buy.

4. Check that all enquiries have been answered

Throughout the conveyancing process, your solicitor will raise questions with the seller's solicitor about the property.

These enquiries help uncover information that may not be immediately clear from the paperwork or searches.

Before exchanging contracts, make sure you're comfortable with the answers, particularly if they relate to:

• Previous building work
• Planning permission
• Building regulations
• Boundaries
• Rights of way
• Guarantees and warranties
• Leasehold terms
• Neighbour disputes

If something doesn't make sense, ask questions. It's far easier to resolve concerns before exchange than after you've bought the property.

5. Confirm what's included in the sale

Don't assume everything you saw during a viewing will still be there when you move in.

The seller should complete a fixtures and fittings form confirming exactly what's included in the sale.

Check whether items such as the following are staying:

• Carpets and flooring
• Curtains and blinds
• White goods
• Light fittings
• Garden sheds
• Integrated appliances
• Fitted wardrobes

If there's something you'd particularly like to keep, make sure it's agreed before contracts are exchanged.

6. Get your deposit ready

By the time you're ready to exchange contracts, your deposit should be available and ready to transfer.

Make sure:

• Your funds are easily accessible
• Source of funds checks have been completed
• Any gifted deposit paperwork has been provided
• Your solicitor has everything they need

Leaving this until the last minute can lead to unnecessary delays.

If a family member is helping with your deposit, it's worth getting the paperwork sorted as early as possible.

7. Arrange buildings insurance

Many lenders require buildings insurance to be in place from exchange rather than completion.

That's because once contracts are exchanged, you're legally committed to buying the property.

Buildings insurance typically covers risks such as:

• Fire
• Flooding
• Storm damage
• Subsidence
• Escape of water

Check your mortgage offer and speak to your solicitor if you're unsure when your policy should start.

8. Budget for the full cost of owning a home

Your mortgage payment is only part of the picture.

Before exchanging contracts, make sure you've thought about the ongoing costs that come with owning a property.

These may include:

• Council tax
• Gas and electricity
• Water bills
• Broadband
• Home maintenance
• Service charges
• Ground rent
• Parking permits
• Travel costs

Top tip

It's easy to focus on your monthly mortgage payment, but your overall housing costs may be higher than you expect. Building these into your budget now can help avoid surprises later.

9. Agree a completion date that works for you

Before exchange takes place, a completion date needs to be agreed by everyone involved.

Take some time to think about what works best for your circumstances.

You may need to organise:

• A removal company
• Time off work
• School arrangements
• Rental notice periods
• Childcare or family support

Once contracts are exchanged, the completion date is fixed, so it's worth making sure you're fully prepared.

10. Consider protecting your mortgage

Buying a home is a huge financial commitment, so it's worth thinking about how you'd manage if life didn't go to plan.

Depending on your circumstances, you may want to consider:

• Life insurance
• Critical illness cover
• Income protection

The right protection could help provide financial support if you're unable to work or if your family's circumstances change unexpectedly.

Your pre-exchange checklist

Before telling your solicitor you're ready to exchange contracts, make sure you can answer yes to the following:

• I've received my formal mortgage offer
• I've reviewed my survey findings
• All property searches have been completed
• All enquiries have been answered
• I know what's included in the sale
• My deposit is ready
• Buildings insurance is arranged
• I've budgeted for ongoing costs
• A completion date has been agreed
• I'm happy to proceed

If you've ticked everything off, you're in a strong position to exchange contracts and move one step closer to getting the keys to your new home.

Frequently asked questions

Can I pull out before exchanging contracts?

Usually, yes. Before contracts are exchanged, neither the buyer nor seller is legally committed to completing the sale.

Can a seller pull out before exchange?

Yes. Although it's frustrating when it happens, sellers can usually withdraw from the sale before contracts have been exchanged.

How long is there between exchange and completion?

It depends on the transaction. Some buyers exchange and complete on the same day, while others may wait several days or even a few weeks.

What happens on exchange day?

Your solicitor exchanges contracts with the seller's solicitor, your deposit is transferred and the completion date becomes legally binding.

Do I need buildings insurance before exchange?

Many lenders require buildings insurance to start from exchange. Check your mortgage offer and speak to your solicitor if you're unsure.

Can anything go wrong after exchange?

Problems are much less common after exchange because both parties are legally committed to the transaction. However, delays can still happen in some circumstances.

Ready to take the next step?

Exchanging contracts is a big milestone, and it's often when buying a home starts to feel real. Taking the time to check the details, understand your responsibilities and get everything in place now can help the rest of the process run more smoothly.

If you're still looking for a mortgage, or you'd like expert support with your application, our fee-free mortgage advisers are here to help you find a deal that's right for you.