Please can someone explain the exchange process?!

sam09_2

Hi! I'm in the middle of selling my house and purchasing a new one. We are currently awaiting our buyer to have the valuation done on our house before they receive their full mortgage offer. We have had our mortgage offer through. I know exchange can't take place before our buyers have their mortgage offer fully accepted. I have paid to start searches on the new house and I've completed paperwork from our solicitors. Just wondering what happens now? Our seller's solicitor has sent his paperwork to my solicitor.

Thanks in advance!!

kingstreet

When all the chain's paperwork is in place and all parties are agreed on a completion date, then exchange of contracts can take place.

sam09_2

Thanks for your reply! What happens with how they are exchanged? Is it a contract that is signed?

kingstreet

Each party signs their contract in advance and the solicitor has it in hand. The exchange process is done by phone, with the cash deposit of the buyer at the bottom of the chain passing up the chain, becoming a smaller proportion of the purchase price at each stage.

princeofpounds

Thanks for your reply! What happens with how they are exchanged? Is it a contract that is signed?

You will have pre-signed the contract already, but it is when the solicitors basically confirm it is all binding, so you can think about it a bit like making your signature on a normal contract; it makes it a 'deal'.

AdrianC

kingstreet wrote: »

...with the cash deposit of the buyer at the bottom of the chain passing up the chain, becoming a smaller proportion of the purchase price at each stage.

The deposit will almost always be 10% of the purchase price, so it'll probably be "topped-up" at each link of the chain. Sometimes, there'll be a bit left over, where somebody's trading-down.

kingstreet

AdrianC wrote: »

The deposit will almost always be 10% of the purchase price, so it'll probably be "topped-up" at each link of the chain. Sometimes, there'll be a bit left over, where somebody's trading-down.

That's not the case, in my experience.

If each party has equity in their property they will not be asked for cash to make up the difference.

It's normally as I said, with solicitor undertakings.

AdrianC

kingstreet wrote: »

That's not the case, in my experience.

If each party has equity in their property they will not be asked for cash to make up the difference.

It's normally as I said, with solicitor undertakings.

If that was the case, then in the case of a scarily long chain starting with a £50,000 flat, the person at the top of the chain with a £2,500,000 house is going to be fairly miffed with his buyer's deposit being only 2% of what it should be...

kingstreet

I'm sorry, I can't comment on the ridiculous, but in my 30 years experience as a broker and several house moves, I've never been asked to introduce cash...

Richard_Webster

In the days when 95% mortgages were common the FTB often only had 5% and that became a smaller proportion of the next property up's price. So 2.5% or smaller deposits were common in practice. In an awful lot of straightforward cases where there isn't a huge variation the price no money does need to be added, but I always warn clients that they may need to do this, particularly if they are going up a lot in value.

bexs2247

Just out of curiosity, the house I'm selling is shared ownership so 10% of that value is going to be quite small (just over 5k), the house we are buying is £180k so 10% of that is a lot more. Will we be asked to add to that then on exchange? (We have the money as we have deposit saved)