Is it OK to exchange contracts on property i'm buying before my property exchanges?

kawoh

Hi all - moneysavingexpert is amazing. Hoping to perhaps get other's opinions on this:

Here are the facts:

1/ I am planning to buy a property - the problem is I am in a race to exchange contracts first with another buyer.

2/ I am under-offer on my property, but my buyers are not in a position to exchange for a few more weeks (need to get the mortgage approved on my physical property, valuation etc).

3/ I have had a mortgage approved but still waiting on the lender to book in a valuation day...

I need to exchange contracts as soon as possible on the property i'm buying and get a LONG completion date. On my property I need to ensure my vendor doesn't pull out (though at the price, I won't have a problem getting another buyer).

So my questions:

1/ What are others thoughts on exchanging contracts on the property i'm buying (yes i have enough deposit) before my property exchanges? (i only have one buyer for my property, no backups if they change/try to get a lower price on mine)


2/ Because it's a race to exchange contracts, is it possible to exchange contracts before I get a valuation and formal written offer from the lender on the property i'm buying?

3/ Can you write in subject to valuation/approved survey etc in the exchange of contract on the property i'm buying (as well as subject to valid searches etc?)

4/ I'm thinking of changing the loan product i'm currently getting but don't want it to go back to the underwriters as that can delay things more. Should I just accept the current product and then can I change this post exchange? (ie prefer to go for a fixed rate rather than variable - lender tell's me oh that will need to go back to the underwriter...) i'd rather just get valued, approved and then have this happen.

Thanks in advance all for your thoughts and views on this.

TBeckett100

to exchange your solicitor needs to see your mortgage offer. i wouldnt get exchange before yours exchanges as the house isnt sold until at least exchange

keith969

Don't do it. If you exchange on your purchase, but your buyer falls through or your mortgage company decides not to lend to you, you are stuffed... see other threads on this site about the very same problem!

chickmug

kawoh wrote: »

So my questions:

1/ What are others thoughts on exchanging contracts on the property i'm buying (yes i have enough deposit) before my property exchanges? (i only have one buyer for my property, no backups if they change/try to get a lower price on mine)

Unless you have lots of £££'s NO WAY should you ever do this.

2/ Because it's a race to exchange contracts, is it possible to exchange contracts before I get a valuation and formal written offer from the lender on the property i'm buying?

If your solicitor knows what they are doing they would not carry out the exchange for you without the formal offer of finance.

3/ Can you write in subject to valuation/approved survey etc in the exchange of contract on the property i'm buying (as well as subject to valid searches etc?)

No way as it makes the contract worthless for the other party as too many let outs

4/ I'm thinking of changing the loan product i'm currently getting but don't want it to go back to the underwriters as that can delay things more. Should I just accept the current product and then can I change this post exchange? (ie prefer to go for a fixed rate rather than variable - lender tell's me oh that will need to go back to the underwriter...) i'd rather just get valued, approved and then have this happen.

Why not ask the FA or lender and see what delays they would anticipate. Without knowing details no one here can give a sensible answer.

Thanks in advance all for your thoughts and views on this.

Here's my advice in red above

franklee

Agree with the posts above. Don't do it.

kawoh

Re point 4 - my lender has said they will need to do a completely new application (not good).

The reason i'm prepared to exchange before mine sells is:

1/ I've had plenty of viewings (was on the market for 2 days, went under offer at asking), buyer fell thru, back on market 1 day, went under offer again. I am confident I can sell

2/ Property i'm buying is a great buy, with big upside

3/ If worse comes to worse, i can find a way to buy the property i'm looking to get with all cash.

Do you all still agree with the 'don't do it'?? Given the upside is excellent.

I mean you need to take risks to get return...

chickmug

"Unless you have lots of £££'s NO WAY should you ever do this."

This was the first answer to your first question. So if you can afford to take the risk - why not? I have taken enough risks in my life where most were OK but a few were not. Luckily those that didn't pay off were the smaller ones.

Thrugelmir

2/ Because it's a race to exchange contracts, is it possible to exchange contracts before I get a valuation and formal written offer from the lender on the property i'm buying?

Suggest you have a long chat with your Solicitor. As you obviously have no idea what you are doing.

He\She will guide you through the process and advise you accordingly.

Whilst like many I'm happy to pass comment on this board. At the end of the day legal advice should be obtained from an individual qualified in the relevant field. Sometimes you have to pay for this advice. :rolleyes:

Trollfever

3/ If worse comes to worse, i can find a way to buy the property i'm looking to get with all cash

As you will be risking your own money you should have no problems!

franklee

kawoh wrote: »

2/ Property i'm buying is a great buy, with big upside

3/ If worse comes to worse, i can find a way to buy the property i'm looking to get with all cash.

Do you all still agree with the 'don't do it'?? Given the upside is excellent.

I mean you need to take risks to get return...

Obviously that you can afford to hold both properties and there is this big upside makes a huge difference, it's a pity that information wasn't in the first post.

So now it comes down to an investment decision, which I don't see a bunch of strangers on the internet who do not know you, your financial details, your attitude to risk, the houses in question etc. can possibly have much clue on.