Exchange and Completion Explained: A Buyer's Guide

Here is exchange and completion explained in plain terms. Most buyers hear the two words and assume they happen on the same day. They usually do not. Understanding the difference matters, because your legal and financial obligations change the moment you exchange.

Below I set out what each step means, why the two are kept apart, and what you should have in place before you commit to either date.

Exchange and completion explained: what they mean

Exchange of contracts is the point where the deal becomes legally binding. Up to this moment, either party can walk away without penalty. After exchange, neither can, at least not without serious financial consequences.

At exchange, your solicitor and the seller's solicitor swap signed contracts and agree a completion date. You pay a deposit, usually around 10% of the purchase price, though this can vary. If you pull out after exchange, you can lose that deposit.

Completion is the day the rest of the money transfers from your solicitor to the seller's solicitor. Once the funds arrive, the property is legally yours and you collect the keys.

Chris Bloor, on site

Once contracts are binding, a survey stops being much use to you. I have had buyers ring wanting an inspection days before a fixed exchange, the chain all set to go together, and by then there is no room to act on what I find. On one Victorian terrace the report raised roof timbers that needed a builder's quote, and that quote took a week to come back. Had they exchanged first, they would have owned the problem. So book it early, read it properly, and get anything it flags priced before the contracts move.

Why is there an exchange date and a completion date

The gap exists to give both sides time to get everything in order without either party being able to back out.

Once contracts are exchanged, the seller can plan their move knowing the sale is certain, and you can arrange the final transfer of funds knowing the price and date are locked in. If exchange and completion happened at the same instant, there would be no protected window to release mortgage money, coordinate removals or line up a chain.

Chains are the main reason the two are separated. If you are buying and selling at once, or you sit in a longer run of transactions, everyone in the chain usually exchanges together and completes together. That only works if there is a short buffer to organise money and logistics.

The gap between the two dates is commonly a week or two, but it can be same-day or several weeks. It is negotiable, and it is set by agreement between the parties.

What happens in the gap between the dates

This period is short and busy. Your solicitor drives most of it, but there are things you need to handle.

Arranging the money

Your solicitor requests the mortgage funds from your lender so they arrive in time for completion. You will also need to send the balance of your deposit and the completion monies, plus fees and Stamp Duty, to your solicitor's account.

Allow time for bank transfers. Large sums can trigger security checks, and a delayed transfer can hold up completion.

Buildings insurance

This one catches people out. In most cases you are responsible for insuring the building from the moment of exchange, not completion. If the property is damaged in the gap, the risk is yours.

Arrange a buildings insurance policy that starts on the exchange date. Your lender will usually insist on it before releasing funds.

Final checks

Your solicitor carries out final searches, confirms the mortgage is ready and prepares the transfer deed. You may be asked to sign documents and confirm details.

If anything material has changed since your offer, for example a defect flagged in your survey that needed a quote, this is the point to have it resolved before you commit.

Chris Bloor, on site

The worst version of this is when something turns up in the gap itself. On one job the drains had backed up between the two dates, and by then the buyer was committed. Their only lever was goodwill, and there wasn't much of it about. Same with a survey read too late. A quote for underpinning or a damp specialist's report can take days to land, and days are exactly what you don't have once the date is fixed. Get the finding, get it priced, then decide. Do all that with the option to walk still open to you, not after it has closed.

What to have in place before you agree to exchange

Do not let anyone rush you to exchange before you are ready. Once you have exchanged, your options narrow sharply. The following should all be settled first.

Your survey

A survey is the one thing that tells you about the condition of the building before you are locked in. A mortgage valuation does not do this: it protects the lender, not you. See Survey vs Mortgage Valuation for the difference.

You want the survey done, read and any concerns priced up well before exchange. If it reveals significant repairs, you may want to renegotiate, and that has to happen before contracts are binding.

Which level you need depends on the property. A modern, conventional home may only need a Level 2, while an older or altered property is often better suited to a Level 3. The tool below gives a straight recommendation.

If you are unsure whether to survey at all, read Risks of Buying a House Without a Survey.

A confirmed mortgage offer

You need a formal mortgage offer in writing, not an agreement in principle. The offer confirms the lender will release the funds. Exchanging without a confirmed offer is a serious risk, because you would be legally committed with no guaranteed way to pay.

Completed searches and enquiries

Your solicitor will run local authority, environmental, drainage and other searches. Any issues that come back should be understood and resolved before exchange. The wider conveyancing sequence is set out in The Legal Process of Buying a House.

Your funds ready to move

Make sure your deposit is accessible and any gifted funds are documented. Solicitors have strict checks on the source of money, and these can take longer than people expect.

A completion date that works

Agree a completion date that gives you time to arrange removals, redirect post and organise utilities. Because the date is fixed at exchange, get it right before you commit.

A short word on timing

Exchange and completion do not have to be far apart, and in a simple purchase with no chain they can even be the same day. But the more parties involved, the more coordination is needed, and the more useful the gap becomes.

Work to your solicitor's guidance, keep your paperwork ready and do not agree to a date until everything above is genuinely in place.

Frequently asked questions

Can I pull out after exchange of contracts?

You can, but it is costly. After exchange you are legally bound to complete. Withdrawing usually means losing your deposit, and the seller may be able to claim further losses. Before exchange, you are generally free to walk away.

How long is the gap between exchange and completion?

It is negotiable. A common gap is one to two weeks, but it can be same-day or several weeks. The right length depends on the chain, your mortgage timing and how quickly funds can move.

When do I need buildings insurance?

In most purchases, from the date of exchange, not completion. The building is your responsibility once contracts are binding, so arrange a policy that starts on exchange day. Your lender will usually require this.

Should I get a survey before or after exchange?

Before. A survey is only useful while you can still act on it. If it flags repairs, you want the chance to renegotiate or reconsider before contracts become binding. See Do I Need a Survey When Buying a House? for more.

What is the deposit paid at exchange?

Usually around 10% of the purchase price, though it can be negotiated lower. This is separate from your mortgage deposit calculation and is paid from your own funds through your solicitor at the point of exchange.