Exchange and completion

Jellybelly50

Hello, 

We are currently in the process of buying a house. We currently have a mortgage on our current house which we will be porting and borrowing more on top of this. 

Our mortgage lender (the west brom) has said that we need to exchange and complete on the same day otherwise we would pay a £10000 charge but this would be reimbursed to us. 

Would this be an additional charge on the mortgage or would it come straight out of our bank account? 

Has anyone exchanged and completed on the same day? 

For reference, our buyer is not a chain and the house we are buying from is no chain to 

BarelySentientAI

Tens of thousands of people have exchanged and completed on the same day.

I wouldn't though.

Sapindus

It sounds like they mean you have to complete on both your sale and your purchase on the same day?

Jellybelly50

Yes we do otherwise we have the ERC of 10000 to pay. 

Don’t physically keep this amount in our current account so unsure where they would debit the money from if we didn’t complete on the same day 

Jellybelly50

I just feel a bit stressed as it means movers need to be arrange on day of exchange and completion. But I am told this is common practice? 

bobster2

Jellybelly50 said:

I just feel a bit stressed as it means movers need to be arrange on day of exchange and completion. But I am told this is common practice? 

Are you sure you haven't misunderstood what they've requested? What they normally insist on is that the sale of your existing property - and the purchase of your new property - compete on the same day. So you would not be repaying the mortage (as you would if there were a gap) and therefore not liable for an ERC. Not sure why a mortage company would be concerned about the date of exchange - in relation to completion - for either contract.

BarelySentientAI

Jellybelly50 said:

Yes we do otherwise we have the ERC of 10000 to pay. 

Don’t physically keep this amount in our current account so unsure where they would debit the money from if we didn’t complete on the same day 

Then you've completely misunderstood. 

They're not asking for exchange and completion on the same day.  They're asking for both completions to be in the same day. 

That's what happens in every chain.

You only pay an erc when you pay off your mortgage - that's completion on your sale.  You get a refund of the erc when you take the new mortgage - that's completion on your purchase.  Both days are set on exchange, but apart from that exchange is not relevant.

Jellybelly50

bobster2 said:

Jellybelly50 said:

I just feel a bit stressed as it means movers need to be arrange on day of exchange and completion. But I am told this is common practice? 

Are you sure you haven't misunderstood what they've requested? What they normally insist on is that the sale of your existing property - and the purchase of your new property - compete on the same day. So you would not be repaying the mortage (as you would if there were a gap) and therefore not liable for an ERC. Not sure why a mortage company would be concerned about the date of exchange - in relation to completion - for either contract.

Actually I think that makes more sense. We are going to check with lender anyway.

Jellybelly50

But don’t we have to put a deposit down for the exchange. The deposit is tied up in our current houses equity.

propertyrental

Jellybelly50 said:

But don’t we have to put a deposit down for the exchange. The deposit is tied up in our current houses equity.

Deposit at exchange is a completely different issue - unrelated to your initial enquiry.

Yes the standard amount paid by the buyer at Exchange is 10%. This amount is obviously taken off what the buyer owes at Completion. Where a sale and purchase are taking place, the buyer receives 10% from their buyer which is passed up to their seller.

If the amounts are different (often one is buying a more expensive property, so 10% on the purchase is greater than 10% on the sale), in which case a lower deposit can often be negotiated eg 8% on the purchase might = 10% on the sale.

BarelySentientAI

Jellybelly50 said:

But don’t we have to put a deposit down for the exchange. The deposit is tied up in our current houses equity.

Is your buyer not paying you a deposit?