Step 9: Exchanging contracts
The final hurdle before the house is officially yours – swap contracts and insure the building. Luckily, they are two of the easier things to sort out.
At this point, the mortgage lender will have approved the mortgage, the solicitor is happy with the results of the surveys and the seller is ready to pass over the deed.
Here’s what happens:
You sign the contract saying that you’ll become the legal owner of the house.
The seller signs their own copy and passes it to their solicitor.
The solicitors swap contracts – handshakes and high-fives are optional here.
You and the seller then sign again.
That’s it. You’re past the point of no return now. If you back out, you forfeit your deposit.
Here’s also where you pay the mortgage deposit. Remember that big chunk of money you saved all the way back in step 3? Say goodbye to that now.
This process usually takes a few weeks. In the meantime, your mortgage lender will probably insist that you get a home insurance policy.
Home insurance isn’t a legal requirement like it is for cars. But most lenders won’t let you have a mortgage until you agree to insure the building.
Your mortgage lender may try to push you into taking out insurance with them. You're under no obligation to do this. In fact, shopping around for cover might save you some money.
Why do I need to insure the house?
From a lender’s perspective, it’s a safety net in case something happens to the house. They’ve invested a big chunk of money in it, so they want to make sure it’s protected.
From your perspective, having to pay for extensive repairs following a flood or rebuilding the house entirely after a fire could leave you out of pocket.
Having cover in place adds that extra level of protection if something should happen to the house.
If you want more in-depth information, check out our guide to buildings insurance.
What do I need to know before I get a policy?
The main thing you’ll need to get a quote is an idea of its rebuild value.
This isn’t the same as the price you paid, ie the market value.
You can use the ABI rebuild calculator to figure out this figure.
When you get a home insurance quote, you’ll also be asked about how far you live from a water course and if there are any trees growing nearby.
If you’ve had a survey done, any issues like this should be highlighted already.
On the contract you signed will be a “date of completion” – that’s the date that you’ll officially become the owner of the house.
This is the date you should set for the start of your insurance policy.
Cutting the cost of your home insurance
With a mortgage deposit, legal fees, stamp duty, mortgage application costs and surveys, you’re probably pretty spent out by now.
So here are a couple of things you can do to help shave a few pounds off the cost of cover:
Beef up your security – the better the locks and alarms on the house, the less risky it is and so the lower your premium could be. The best ones to get are 5-lever mortise deadlocks.
Look for the Kitemark that shows they conform to British Standards. Take a look at our guide to lock types for more information.
Change your excess – if you’re willing to put up more of the initial cost of a future claim, your overall premium may come down. Take a look at our guide to home insurance excess if you need extra information.
Once you’re insured, just wait until the date of completion and you can pick the keys up from the estate agent.
You’re now officially a homeowner – congratulations!
Next comes the most exciting part of all – the big move.