Who would need a day one remortgage?

Day one mortgages are designed to help people remortgage their homes as quickly as possible after purchasing them.

This is ideal for people who want to take advantage of falling interest rates, switch their mortgage provider, or access additional equity. It can also be beneficial for those looking to consolidate debt and reduce their monthly payments. With a day one remortgage, you could save thousands in the long run, so it’s definitely worth considering if you’re in this position.

Wanting to remortgage your house straight after buying it might sound like a daunting task, but it doesn’t have to be. With the help of an experienced mortgage broker, you can secure a next day remortgage with relative ease.

What are day one remortgages?

A day one remortgage is a type of mortgage that can be obtained shortly after purchasing a property. The main difference between a day one remortgage and a traditional remortgage is that the name of the person who owns the property may not yet appear on the Land Registry.

Because of this many lenders apply the ‘six month rule‘. This means that the name of the owner must have been on the Land Registry for at least six months before they can be considered for a next day mortgage.

However, there are some lenders who offer day 1 remortgages without taking into account this rule. To qualify, applicants generally need to provide proof of ownership (e.g. the title deeds and a copy of the contract signed when purchasing the property).

This restriction applies to any remortgage application made during the first six months of ownership, even if it is just one day after buying a property.

Why is there a six month waiting period?

The six month waiting period is in place to protect both the lender and borrower. By having a set time frame for legal ownership, lenders can be sure that the borrower is the genuine owner of the property and not someone else. This helps them to minimise any risks associated with lending on a property so early after purchase.

Furthermore, lenders can also ensure that the house is in good condition and worth what they are lending against it. In the past , there have been cases of property owners attempting to remortgage shortly after purchase, using inflated valuations, in order to secure the funds they need to do up the property and increase the value.

In these cases, lenders can suffer losses as they are unable to recoup their money if a borrower defaults on payments. By having a set waiting period, lenders can be sure that the property is in good condition and worth what they have lent against it.

How do they work?

Day one remortgages work just like any other remortgage. You apply for the mortgage, submit your documents, have the property valued and wait for the lender to approve your application.

You will need to verify you own the property, as your name may not yet be on the Land Registry.

If your name is not listed on the Land Registry, you will need to provide proof of ownership. This could be a copy of the contract from when you purchased the property, and/or the title deeds.

Once approved, the loan is taken out in your name and you begin making payments on it.

Why would you need a day 1 remortgage?

There are a number of reasons why you might need to remortgage your property shortly after purchasing it.

You may have initially paid cash for the property

This can happen for a few reasons, and it’s common for auction purchases, but often there’s just not enough time to get a normal mortgage approved. If there’s a deal to be done then cash is king.

Once completion has taken place you can start planning to apply for a remortgage to extract your capital. Bear in mind that remortgages for investment properties are generally capped at 75% LTV.

You inherited a property

This is a very generous gift. If you intend on keeping it then a remortgage is the only way to extract some of the equity tied up in it. Perhaps this could be used for some maintenance work or to fund another property purchase.

You used someone else’s money to buy the property

And now they want it back! That’s fair enough I suppose. Another good reason to re-mortgage and extract some capital value.

You were going to flip the property

But now you want to keep it and need a long term mortgage.

Initially the property wasn’t habitable

So it was purchased using a bridging loan. You have completed the improvements and are now looking to remortgage the property in order to clear the bridging loan and move to a cheaper interest rate.

There weren’t any good deals around

When you purchased the property. But now there are some that you could switch to.

What are the advantages of using a broker to get your mortgage?

Using an independent mortgage broker can help you to get the best possible deal on your day one remortgage. Not only do they have access to the widest range of lenders, but they can also provide expert advice and guidance every step of the way.

As many well known lenders do enforce the 6 month rule, the number of lenders to choose from is reduced. Broker’s however, have access to many more lenders, who only work with intermediaries in certain niche areas.

They will be able to assess your financial situation and determine which lender is most likely to accept your application. They will also negotiate with lenders on your behalf to ensure you get the best possible terms for your loan.

Furthermore, brokers can help you to understand all of the legal requirements associated with day one remortgages and make sure that you meet them. This is particularly important if you are trying to remortgage within the six month window.

At the end of the day, brokers are there to help you get a better deal on your remortgage and save you time and money in the process.

Which lenders offer day one mortgages?

There are currently a good range of lenders who offer day one remortgages. These include traditional banks and building societies such as NatWest, Santander, Nationwide and Barclays, as well as specialist lenders such as Shawbrook Bank and Together Money.

It is important to note that each lender may have different criteria, so it’s always worth consulting a broker who can advise you on which lenders are best suited to your circumstances.

Having bad credit will further affect your remortgaging options but solutions are normally available.

What information do I need to provide?

When applying for a day one remortgage, you will need to provide certain documents and information. This should include proof of identity, such as a passport or driving license; proof of current address, such as a recent utility bill; evidence of your income and expenditure, such as recent bank statements; and any other documents that may be relevant to the application process.

You will also need to provide details about the property you are remortgaging, including the current market value and any existing mortgages against it, such as property auction finance.

How to get the best deals

The best way to secure the best deals on a day 1 remortgage is to compare different products from different lenders. This can be time consuming and challenging, so using a mortgage broker who can source the most competitive rates for you can save both time and money.

Having a large deposit/equity and a low loan to value means that you should get the best rates. You don’t normally pay a deposit when remortgaging, the lender uses the property equity instead.

It is also important to make sure that you have a good credit score and can prove your income, as this will help to ensure you get the most competitive terms. Lenders can often look favourably on applicants who’ve held the same job for some time or are self employed but can demonstrate regular earnings.