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The Ultimate Guide to Property Chains

Mar 12, 2021 by Irini Sala

Property chains are commonplace in the buying and selling game, and the likelihood that you’ll have to deal with them at one point or another is pretty high. Whether you’re a buyer or a seller, it’s a very good idea to get familiar with property chains.

In this ultimate guide, we’ve covered what a property chain is and how they can affect you. We’ll also take a look at onward chains, cash buyers and bridge loans, as well as the benefits of buying chain-free.

It’s a well-known fact that property chains can make the buying and selling process a lengthy one, but with the help of this guide, you’ll be in a better position to deal with any issues that might come up.

What is a property chain?

In short, a property chain is a series of different people buying and selling, who are all linked together in a ‘chain’ because each one is buying and selling a property at the same time.

For example, the person you are buying a house from is selling to you and, in theory, buying from someone else. You’re all therefore part of the same property chain.

Chains can be the cause of some major drama, especially if there are any issues that affect any one person in the chain. These issues can slow down sales and potentially even halt them completely.

Understanding how a property chain works, where it starts and ends and how to ensure your chain runs as smoothly as possible is important to securing a sale.

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How does being in a property chain affect me?

Being in a property chain can affect you in a multitude of ways. It goes without saying that these situations can be very stressful, especially if you’re moments away from exchanging, only for the sale to fall through at the last minute.

Property chains are the number one reason for a property sale to fall through. This is because, in the UK, making an offer on a house is not legally binding. The sale is only official when the contracts are exchanged.

It can take up to 3 months for the contracts to be exchanged, which leaves plenty of time for things to go awry.

Taking out a bridge loan or buying in cash can offer some solace if you’ve already moved forward with the purchase of your next home, only to have your end of the chain collapse.

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No onward chain

Generally, when you’re buying or selling as part of a chain, each person in the chain requires their own individual sale to go through before they can purchase their next home.

No onward chain, in short, means that the vendor of a property doesn’t require funds from the sale of their own home to move into a new one. The fact that they aren’t reliant on a sale means that they are at the top of the chain.

The reasons for this can include: the vendor already has another home to move into, they have decided to rent their next home, or they are relocating (perhaps abroad).

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Cash buyers

When you’re perusing the likes of or , you’re likely to have seen the phrase ‘cash buyers only’. But what exactly does this mean?

Someone who is a cash buyer can purchase their house without the need for a mortgage, and therefore doesn’t need to rely on property chains. Sounds pretty awesome, right? Certainly, there are advantages to being a cash buyer, but it’s not always as straightforward as it seems.

Of course, being a cash buyer speeds up the entire process of buying or selling a property. However, you obviously need to have this cash to hand. And with the average house price in the UK being around £250,000, you need to have rather a lot of it!

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What is a bridge loan?

As we’ve already discussed, property chains have the potential to ruin even the best laid plans. But if it’s not possible for you to buy in cash, is there another option? This is where a bridge loan comes in.

A bridge loan ‘bridges’ the gap between needing to pay for something and actually having the funds to do so. Bridge loans are often used when there’s a delay in a house purchase, most likely caused by a broken property chain.

There are two different types of bridge loans: open bridge loans and closed bridge loans. The former has no fixed dates, while the latter is usually only used for a shorter period and has specified dates.

While a bridge loan can be helpful, they are mostly used as a last resort, as they tend to come loaded with very high interest rates. This means you end up spending a lot more money in the long run.

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How long is a property chain?

A property sale can take anywhere between 8 weeks and 6 months to go through, and property chains have the potential to increase this time period even further.

The length of a property chain really depends on the circumstances, and you can’t really control how long or short your property chain is going to be.

As mentioned, there are ways you can try to avoid being involved in a chain altogether. However, if that’s not an option, iBuying may be something to look into.

iBuying is becoming increasingly popular in the UK property market, as it avoids property chains. This involves an agent – for example, – purchasing your property and selling it on the market. This leaves you free to search for your next home without being tied to a chain.

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Advantages of buying a home chain free

There are quite a few advantages of buying a property chain free, if you can.

The main advantage is that the whole buying and selling process will be much quicker if you go chain-free. The reason for this is that you’re only relying on your own sale to go through, and you don’t have to worry about a collapse elsewhere in the chain.

Because chain-free buying and selling is more straightforward, sellers also usually prefer this approach. It tends to make things easier for everyone involved.

Of course, being a chain-free buyer doesn’t come without a cost. It’s very important that you fully understand the costs associated with chain-free buying and that you can comfortably afford it.

Some people prefer to rent in order to avoid a long and involved property chain.

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Navigating property chains with success

A property sale can take anywhere between 8 weeks and 6 months to go through, and property chains have the potential to increase this time period even further.

As you probably now know, the world of property chains is pretty complicated, with a whole host of potential pitfalls.

However, with great risk comes great reward; most people who are buying or selling end up having to deal with a chain. It’s all a normal part of the path to getting your dream property.

The trick to navigating a chain is to get informed and be realistic in your expectations. If you can’t avoid a property chain, the best thing you can do is to move forwards with calm and confidence, being aware of the risks and making decisions that are right for you.

Guides for Home Sellers
Mar 12, 2021 by Irini Sala

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