Finance glossary
Exchange of Contracts
Also known as: Exchanging contracts
In simple terms
Exchange of contracts is the point in buying a home when the deal becomes legally binding. Once contracts are exchanged, neither the buyer nor seller can pull out without serious penalties.
On this page
What does exchange of contracts mean?
Exchange of contracts is the stage in an English and Welsh property purchase where the signed contracts from the buyer and seller are formally swapped, making the sale legally binding on both sides.
Up to this point either party can walk away. After exchange, both are committed to completing the sale on the agreed date.
How exchange of contracts works
Before exchange, the conveyancers make sure searches are done, enquiries answered, the mortgage offer is in place and the deposit is ready. Exchange usually happens when both sides — and everyone in the chain — are ready.
At exchange, the buyer normally pays a deposit (often around 10% of the price) and a completion date is fixed. Between exchange and completion the buyer arranges buildings insurance, as they are now committed to the purchase.
How could this affect me?
Exchange is the point at which you are protected from being gazumped — the seller can no longer accept another offer. It is also the point of no return: pulling out after exchange usually means losing your deposit and possibly facing further costs.
Because it is binding, make sure everything is genuinely in place first — your mortgage, insurance and moving arrangements — before instructing your conveyancer to exchange.
Things to watch out for
- After exchange you are legally committed — pulling out usually means losing your deposit and possibly more.
- Make sure your mortgage offer and finances are fully in place before exchanging.
- Arrange buildings insurance from the moment of exchange, as the property is now your responsibility.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- GOV.UK, How to buy a home — exchange and completion (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, Exchange and completion when buying a home (opens in a new tab). Accessed 22 Aug 2026.