Buying a new home can be both exciting and daunting. It’s an exciting time because you get to pick your own space and create the perfect place for your family. But it’s also daunting because of all the terms that come with buying a new home. One of the most important terms is what happens when you pay your solicitor on exchange or completion.
It’s not always straightforward, so here are some tips about how to pay your solicitor on exchange or completion in the best way possible for you and your family.
In the UK, it is up to you whether or not you want to pay your solicitor on exchange or completion. There are a few different things you need to consider before making this decision. One of the key points is that if you pay your solicitor on exchange, they will have access to your money. This means they can withdraw funds even if you haven't finished paying off your mortgage yet.
This might be a good option for certain people because the solicitor will get the cash they are owed without waiting until completion. However, this could be an issue if something goes wrong and the price of the property drops. For example, if there was an economic downturn in the country and house prices dropped significantly, then this might cause problems for some people who paid their solicitor on exchange because their property might not sell for what they're owed.
If you decide paying on completion is better, then this means your solicitor will only get their final payment when your house is sold and all costs have been paid out by both parties involved in the sale - including any deposit held by solicitors as a result of selling a property at auction. With this agreement, it could take longer than normal for them to get their full payment from you - but it's worth it if more issues come up with the property later down the line because solicitors won't automatically have access to money from other debts before completion happens.
The best way to pay your solicitor on exchange or completion is to pay them before you move into the new property. When you arrange a date for exchange or completion, you will set up an agreement with your solicitor and agree on how much they need upfront. The amount you give them upfront is usually 10% of the total purchase price, but it can vary depending on the solicitor and what their policies are. This payment ensures that they have enough money to cover any remaining costs and fees associated with buying your new home.
If you wait until after your home has been exchanged or completed, it may be too late for a full refund if something goes wrong with the process. You also risk incurring additional fees from the solicitor such as attorney's fees and expenses related to title work. These fees might not have been anticipated at the time of your initial agreement, so waiting may make completing the purchase more expensive than expected.
You should always try to pay your solicitor as soon as possible. This is because when you pay your solicitor, they invoice the seller and the seller will then release your money on completion. There is a slight risk that if you don’t pay your solicitor, they may release the money to someone else and not you.
If you’re paying your solicitor by cash or cheque, make sure you do it before exchanging contracts with the seller. If you’re paying electronically, make sure it’s done at least 3 working days before exchange of contracts.
Before you decide to pay your solicitor on exchange or completion, it’s important that you ask the following questions:
- How much will the solicitor charge?
- What date will the solicitor expect me to pay?
- How do I make sure my solicitor is paid?
- What are the benefits of paying my solicitor on completion?
The amount you pay your solicitor will depend on the type of property you’ve bought and the type of conveyancer you used. You should ask for a quote before you choose to pay your solicitor, so that you know what to expect in advance.
In general, solicitors charge by the hour, so it can be difficult to know how much they charge until you're more than halfway through the process. When determining how much to give your solicitor, keep in mind that they'll need at least two hours to complete everything they need to do - this includes:
-Opening an instruction file
-Researching land records and previous sales of property
-Searching for any restrictive covenants or other encumbrances on the property
-Drawing up an agreement of sale and mortgage deed
-Dealing with mortgages
-Dealing with freehold interests or leasehold interests
-Finding out about any implications for selling as a company (i.e. trade names)
-Deciding on whether or not to apply for a tax certificate from HMRC
Paying your solicitor on exchange or completion means you are paying them in the stage when they prepare the documents to complete a house sale. You usually pay at this point because it is a final payment and it's the solicitor’s job to ensure that all paperwork is completed.
If you have not yet paid, there are risks involved - if you can't find your solicitor on completion, you might be left without any documentation to show that you bought the property. This could mean you would have to go through another round of searches and solicitors fees before finally settling into your new home. It would be wise to try and contact your original solicitor at least three months ahead of time so that they know in advance that you will be making an interim payment on exchange or completion.
There are also risks when it comes to paying in installments instead of one lump sum payment. If anything happens between accepting the offer and exchanging contracts, such as market fluctuations or interest rates, then you will lose out financially if those changes happen after completion but before your final mortgage repayments start.
If you’re not sure whether or not you should be paying your solicitor on Exchange or Completion, the answer is yes. Paying them on Exchange or Completion is the best way to go about it.
Paying your solicitor on Exchange or Completion is the most popular payment option, only 3% of the solicitors surveyed said they were not paid in this way. It’s easy to set up, there are very few risks involved, and it’s cheaper than paying them at a later stage when their fees increase.
If you want to find out more about how to pay your solicitor, visit our website.
