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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 17th November 2020*

We get lots of enquiries from people who have recently completed a house purchase and now want to consider a ‘day 1 (one) remortgage’. Before doing this, it’s important to understand exactly what they are, why they’re used and how they work. 

To answer these questions we’ve put together this guide which covers: 

Once you’ve read through the details below if you’d like to know more about where you can find the best day one remortgage deals make an enquiry and we can arrange for an advisor we work with to get in touch. 

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What is a day 1 remortgage?

As the name suggests, a day 1 remortgage is a loan facility that could, potentially, be available to someone the day after they take ownership of a property. 

Traditionally, most mortgage providers do not offer a remortgage facility within six months of a homeowner completing on a property. In fact, some may ask for twelve months before this will be considered. 

The six-month mortgage rule was introduced by the Council of Mortgage Lenders (CML) in the aftermath of the 2008 financial crash in order to properly regulate any questionable practices which could lead to a homeowner falling into negative equity. 

However, there are a number of legitimate reasons why someone may want to raise funds within this six-month timescale. In order to meet this demand, a host of lenders now offer day one remortgages whilst adhering to strict CML guidelines. 

Why would I use a day 1 remortgage?

The type of scenarios where you may require a day 1 remortgage could include: 

  • Needing to remortgage to release equity to buy another property quickly (to beat the competition or through an auction, for example) using cash reserves borrowed from a family member or friend and now need to raise funds to repay this amount
  • You may have been gifted a property through inheritance and want to raise funds using your newly acquired home as security
  • You’ve used your own cash reserves to buy a property but now need to remortgage for home improvements

When would I use a day 1 remortgage?

A day 1 remortgage would typically be used at any point during the first six months since you completed a property purchase. After this point you can consider more traditional remortgaging facilities which may offer lower interest rates. 

If you’re interested in a day 1 remortgage loan facility and would like to know more about why and when they can be used, get in touch and we can arrange for a remortgage broker to discuss this in more detail. 

How do day 1 remortgages work?

Day 1 remortgages work along similar lines to traditional remortgages. The main difference between the two is verifying the ownership. If the property is not yet showing at the Land Registry with your details as the owner you can request confirmation from the solicitor who acted on your behalf during the sale/purchase process. 

Day 1 remortgages are available for both residential and buy-to-let properties, either on an interest only or capital and interest basis. 

The loan to value (LTV) will vary from lender to lender. Most lenders will offer a LTV of between 75%-85%, some will go as high as 90%-95% and a few may be prepared to go as high as 100% in exceptional circumstances. 

If you’d like to know more about how day 1 remortgages work and the different types of loans available, make an enquiry and we can arrange for a specialist to get in touch to discuss this further with you. 

How can I get the best rates for a day 1 remortgage?

Typically, the strongest mortgage applications will be able to access the best interest rates and day 1 remortgages are no different. 

Affordability will, as ever, be a crucial factor. Different lenders will apply different rules surrounding sources of income and the income multiple used. Most providers will cap their lending at 4.5x your income, some will go as high as 5x and a few will stretch to 6x, depending on the circumstances. 

For more information on affordability criteria take a look at our affordability guide.  

There can be a number of other factors that may affect the interest rate available for a day one remortgage, such as: 

Property type 

Every lender is different, but many don’t accept property that is non-standard, unique, or listed property, generally because they fear the properties are higher risk and less sellable. That said there are lenders that are happy to consider a wide range of property types. For more information on this see our non-standard property section.

Credit History

A poor credit record will likely have a detrimental effect on your application and certainly influence the interest rate you may have to pay. This will vary from lender to lender as they all adopt different rules. Some lenders will not accept such applications whereas others will consider them depending on the circumstances. 

For more information on this see our bad credit mortgages information section. Or make an enquiry and we’ll refer you to one of the experts for the right advice. 

Speak to a day one remortgages expert

Day 1 remortgages are a very useful form of lending, particularly if you have unexpectedly inherited a property or used all of your cash reserves on a purchase and now need to raise funds in order to carry out essential renovations. 

If you’d like to speak with someone who can offer assistance with this form of lending call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry

The advisors we work with have a wealth of experience in areas such as this and deal with customers in your situation all the time.

Updated: 17th November 2020
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.