With many buyers rushing to beat the stamp duty holiday deadline at the end of June, you may be wondering if you could exchange contracts and complete on the same day. It sounds like an obvious answer, but can it be done?
You’re close to exchanging contracts on your house purchase and you’re understandably keen to make every possible saving. You’ve kept funds aside to pay your solicitor and your deposit is ready. You know what you need to spend on legal costs and moving house – and you’re aware of what your monthly mortgage payments will be – there’s just one unknown. You’re unsure whether you’ll meet the stamp duty holiday deadline.
If your property transaction completes after 30 June, you’ll have to pay five per cent stamp duty on the portion of the property from £250,001. Even if you’ve budgeted cautiously, you know there’s so many things you could spend that money on, including new furniture. Is it possible and even sensible to consider exchanging and completing on the same day to beat the stamp duty deadline?
Firstly, let’s be clear on the process of exchange and completion. When you and the other party have your paperwork ready, contracts can be exchanged. This means you both sign identical documents and your solicitor will exchange contracts on an agreed date.
What does exchange of contracts mean?
Exchanging contracts means you are legally committed to buying or selling a property. If you’re the buyer, you’ll need to pay ten per cent of the property price upon exchange, unless you’re getting a 95 per cent mortgage and only have a five per cent deposit. In this situation, your solicitor should be able to negotiate the amount of the deposit you pay down to five per cent.
What does completion mean?
Completion is the final stage of the transaction and means that the buyer has full ownership of the property, as the vendor will receive the remaining funds owed to them. The buyer will receive the keys and the vendor should vacate the property by 1pm unless a different time has been agreed between solicitors.
Is it possible to complete and exchange on the same day?
Yes, it can be done, but it can make the transaction more stressful for those involved. It is more common if you have a simple transaction where there is no chain. If you are a first-time buyer and your vendor isn’t in a chain, it could work. It could also work for a cash buyer with no mortgage.
However, it also depends on the mortgage lender. If you do have a mortgage, you may find that some lenders will insist on a minimum of five days between exchange of contracts and completion.
There are risks to exchanging and completing on the same day. These include searches not being received and last-minute issues with the mortgage. It’s best to build in a buffer of a week to ten days between exchange and completion to avoid any last-minute problems.
Why is there usually a delay between exchange and completion?
The timeframe between exchange and completion is normally one to two weeks and this is usually quite helpful to both parties where finalising tasks is concerned. It gives both parties time to pack up and organise removals. It also gives them time to change their addresses and get mail redirected.
Is there anything you can do to speed up the buying process?
Responding to queries from your solicitor promptly and having your deposit ready to transfer to your solicitor in good time can help. Make sure you have your buildings insurance ready too as this needs to start from the date of exchange. Your solicitor will need details of your buildings insurance. It’s always best to ensure you’re not away during the process so that you can always be easily reached in the event of any queries.