Day 1 Remortgage: Quick Capital Access After Purchase
Purchasing a property, whether for investment or as your dream home, can come with plenty of financial considerations.
Sometimes, you may find yourself needing to remortgage immediately after buying. This process, known as a Day 1 remortgage, can be a strategic financial move but comes with its own challenges.
What is a Day 1 Remortgage?
A Day 1 remortgage allows you to refinance your property immediately after purchasing it, even from the very first day you complete your ownership.
Many lenders have a six-month ownership rule, which means they won’t consider a remortgage application until you’ve owned the property for at least six months. However, there are situations where accessing your property’s equity right away is necessary, and that’s where Day 1 remortgages become useful.
Why You Might Need a Day 1 Remortgage
There are several reasons why you might want to remortgage your property soon after purchase:
Buying Property at Auction: If you purchased a property at auction with cash to secure the deal, a Day 1 remortgage can allow you to free up that capital for other investments or expenses.
Inherited Property: If you’ve inherited a property and need funds for maintenance, repairs, or other personal reasons, remortgaging from day one can provide that financial flexibility.
Home Improvements: You may need to fund renovations to increase the property’s value or make it habitable.
Bridging Loan Repayment: If you initially used a bridging loan to purchase the property, a Day 1 remortgage can help you pay off that high-interest loan quickly.
Debt Consolidation: In some cases, consolidating your existing debts into a remortgage can streamline your finances and potentially lower your overall interest costs.
Repaying Family: It may be that family helped you secure the property using cash to enable a quick purchase and you now want to refinance to pay them their money back.
Find out Your Options
How Day 1 Remortgages Work
The mechanics of a Day 1 remortgage are similar to a standard remortgage but with a few key differences.
Here’s what you need to know:
Proof of Ownership
Your name may not yet be on the Land Registry if you’ve just completed the purchase. In such cases, you’ll need your solicitor to confirm your ownership.
Property Valuation
A lender will usually require a current property valuation. Depending on the property’s condition and market factors, this can influence the loan-to-value (LTV) ratio they offer. Often lender will use only the value that you bought the property for unless you can demonstrate value uplift by way of significant refurbishments.
Loan-to-Value (LTV) Ratios
Many lenders offer LTVs ranging from 75% to 85%, though some may go higher. Your financial stability, property type, and credit history will all play a role in what’s available.
Interest Rates and Terms
Interest rates for Day 1 remortgages but are usually standard lender products, offered by lenders that can accommodate the situation. It’s recommended to consult with a mortgage broker to find the most competitive rates.
Challenges of a Day 1 Remortgage
While Day 1 remortgages are an excellent option for some, there are potential challenges:
- Limited Lender Options: Not all lenders offer these products, which means you may have fewer options compared to standard remortgages.
- Early Repayment Charges (ERCs): If you are remortgaging from an existing mortgage, ensure that you check for any early repayment fees that may apply.
How Kerr & Watson Can Help
Taking a remortgage can be overwhelming, and with fewer lenders in the marker, Day 1 remortgages can make the process more stressful.
At Kerr & Watson, we specialise in understanding your unique situation and finding the best possible mortgage solutions tailored to your needs. Here’s how we can assist:
- Expert Advice: Our team has extensive experience in handling niche mortgage products, including Day 1 remortgages. We can advise you on the best course of action and connect you with lenders who are willing to work with you.
- Access to High Street And Specialist Lenders: We have a broad network of lenders, including those who offer Day 1 remortgages. This access ensures that you have the best chance of finding a suitable and affordable deal.
- Personalised Support: We take the time to understand your financial goals and help you navigate the application process, ensuring that everything is in order and your application is as strong as possible.
Common Misconceptions About Day 1 Remortgages
It’s worth debunking a few myths surrounding Day 1 remortgages:
- “They’re Only for Property Developers”: While property developers do use Day 1 remortgages, they are also suitable for everyday homeowners, landlords, and investors in the right situations.
- “You Can’t Get a Good Deal”: While options may be more limited, working with a specialist broker like Kerr & Watson can help you secure a competitive rate, with access to both high street and specialist lenders considering these situations.
- “It’s a Complicated Process”: With the right guidance, a Day 1 remortgage can be straightforward. Our team at Kerr & Watson will guide you every step of the way.
Conclusion
Day 1 remortgages can be a practical solution for releasing capital quickly after purchasing a property.
Whether you’ve bought at auction, inherited a property, or need funds for renovations, the right remortgage deal can make a significant difference.
At Kerr & Watson, we pride ourselves on providing tailored advice and support, ensuring your remortgage journey is as smooth and beneficial as possible.
Contact us today to discuss your options.
