There's a good chance that while searching for properties you've come across the phrase "no onward chain", but what does it mean?
Today we're going to explain what an onward chain is, what a property chain is, and what the benefits of purchasing a property with no onward chain are.
Property chains explained
When a seller needs to use the funds from the sale of the current house to purchase their next home they have an onward chain.
It's pretty common for buyers to be in this situation, so don't be surprised if a property you are interested in has an onward chain.
When there are multiple people with onward chains purchasing properties from one another, a property chain is formed. Each sale/purchase is reliant on another to be completed, and the property chain gradually becomes more complex as it gets longer.
Imagine person A needs to sell property A to fund the purchase of property B, their next home. Meanwhile, the owner of property B needs to sell property B to purchase property C, their next home, and so on.
Being in a property chain shouldn't be an issue as 2 out of 3 property chains are completed without collapsing.
However, it's the threat of the chain breaking that makes buying a property with no onward chain advantageous.
What happens when a property chain breaks?
Being in a property chain means you are reliant on other parties to complete their purchase/sale to ensure your purchase and sale are successful.
As each transaction is linked, delays or issues with one transaction can affect another.
This could be something small like a delay of a few days due to a paperwork complication.
On the other hand, bigger issues can arise when a purchase or sale in the property chain falls through.
This could happen due to a number of reasons, such as a seller or buyer changing their mind, a buyer getting gazumped, a mortgage application getting rejected, or a survey discovering serious issues with a property.
Can I prevent a property chain from breaking?
There's nothing you can do to avoid a property chain collapsing as you are reliant on the other parties in the chain doing their part.
Therefore you should do the same. Be up to date on the sale of your current home and the purchase of your next home to avoid being the weak link.
First time buyers are in a particularly good position as they will not be selling an existing property to fund the purchase of their new home, meaning they will always be at the start of a property chain.
You can search for properties specifically with no onward chain if you want to avoid entering a property chain altogether.
If you plan on selling your current property to fund the purchase of your next home, why not book a free property valuation?
Our local experts will provide a realistic market valuation for your property and offer advice and guidance with no obligation to sell.
Your Move E-Marketing Executive
