Why Wait Six Months? The Untapped Potential of Day One Remortgages
If you’ve recently acquired a property, you’re probably familiar with the traditional waiting period imposed by many lenders before you can remortgage. Typically, this ranges from six to 12 months. However, what if you could bypass that timeframe and access the funds you need almost immediately? Welcome to the world of day one remortgages. Most commonly used to leverage properties that were not mortgageable at purchase, or bought below market value and then improved rapidly.
What Are Day One Remortgages?
Day one remortgages offer a financial solution for those looking to remortgage their property immediately after purchase. Unlike traditional remortgages, which often require a waiting period of six months or more, day one remortgages allow you to free up capital right away. This is a breakthrough option for those who dont want to wait.
The Genesis of the Six-Month Rule
The six-month waiting rule was instituted by the Council of Mortgage Lenders (CML) in 2008, primarily as a protective measure against market instabilities. This rule applies to the majority of high street lenders, but exceptions do exist. Over the years, specialized lenders have emerged, offering day one remortgages under certain conditions, essentially turning the tables on the traditional six-month rule. Sometimes the lenders will impose a restriction on the value, capping this at the purchase price. This negates the benefits of improving the property rapidly, but allows a property with no functioning cooker, or a disconnected water supply to be addressed quickly and capital released. Others will consider improvements if they are easy to evidence and the surveyor will often want to see before and after pictures and invoices for the work carried out. Others offer a more hybrid approach where they will bridge the initial loan and switch it to a longer term mortgage internally, avoiding expensive fees and providing more certainty upfront. Either way its a powerful tool to have at your disposal when buying property.
Other scenarios Where Immediate Remortgaging Makes Sense
Replenishing Cash Reserves
Imagine spending your entire savings on purchasing a property, perhaps at an auction. Now, you need quick funds for essential repairs or further investments. A day one remortgage can replenish your cash reserves in no time.
Repaying Loans from Loved Ones
If you initially secured your property by borrowing money from a friend or family member, a day one remortgage could enable you to settle this personal debt promptly.
Releasing Equity in Gifted or Inherited Properties
Should you inherit or receive a property as a gift, day one remortgages offer a swift avenue to liquidate some of its value.
Disadvantages of Day One Remortgages
Land Registry
Acquiring a day one remortgage is similar to securing a standard mortgage, however the solicitor must be able to see that you own the property to complete and the lenders will check on application. Caution must be taken to ensure the Land Registry has updated the title to reflect your new ownership amidst ongoing delays.
Cost
Specialized lenders with deep knowledge of day one remortgages can offer greater flexibility, however their rates can be higher and its worth weighing up the benefits of releasing the funds early over those higher costs. Our brokers at AALTO Mortgages can lay out allthe options for you making it easy to make those decisions.
Additional fee’s
Often a valuation will be chargeable with no guarantee it will be accepted and so the expert advice at AALTO Mortgages will help weight up if its a worthwhile investment.
Conclusion: When Time is Money, Day One Remortgages Shine
Day one remortgages serve as a compelling alternative to conventional remortgaging avenues, offering immediate financial relief for various needs. Whether you are looking to invest further, undertake urgent repairs, or simply repay a personal debt, day one remortgages offer a lifeline when waiting is not an option.
While the market for these innovative financial products is still evolving, the expertise at AALTO Mortgages can guide you through the labyrinth of options, ensuring you secure the best deal for your circumstances. If you’re contemplating whether a day one remortgage could be the right financial instrument for you, the benefits outlined above make a compelling case for consideration.
