When navigating the mortgage sector, it’s useful to understand all the options available to you to help you make the decision that’s right for your finances. While no longer very common, a type of loan called day 1 remortgage – or a day 1 mortgage – does still exist. Here, we take a closer look at what this mortgage type means for property buyers to uncover whether this remortgage option is right for you.

What Is a Day 1 Remortgage?

A day 1 remortgage (or day one remortgage) is when a homeowner switches their mortgage within the first 6 months of purchasing the property. You can apply for a Day 1 remortgage on or after completion of the property purchase. 

Up until the 2008 financial crash, remortgaging a property within the first 6 months was not uncommon. However, post-crash, this practice has become much less common as a measure to protect lenders from incurring significant losses. Some buyers had purchased properties at a discount and then remortgaged within the first 6 months of ownership with a larger home loan. This often resulted in the property owner having no personal capital invested in the property. 

During the financial crash, many of these properties fell into negative equity, and if the owner defaulted on their payments, the lender faced the risk of repossessing the property at a loss. 

Despite its complex history, the Day 1 remortgage is still available under certain circumstances. Several niche lenders offer this type of remortgage, governed by strict guidelines set out by the CML (Council of Mortgage Lenders).

Why Might I Need a Day 1 Remortgage?

There are 3 main reasons a mortgage provider might grant your application for a day 1 remortgage. 

  1. If you’ve inherited a property and you intend to keep it for whatever reason, you might be in the position where you must buy out other inheritors. You’ll need to remortgage to do this and a day 1 remortgage might suit your needs
  2. Another reason for applying for a day 1 remortgage is to perform repairs or renovations on your property. You may have carried out extensive repairs within the first few months and decide to remortgage to release some of the equity you have built up recently. This could provide you with the opportunity to continue with the work you want to carry out on your home
  3. The third reason you might wish to acquire a day 1 remortgage is if you purchased the property outright with cash and want to release the funds back to yourself. If you need to buy another property quickly, say at auction, this type of remortgage product facilitates this

Can I Get a Day 1 Buy to Let Remortgage?

Day 1 remortgages are often used for buy to let purposes. If you’ve purchased a property quickly with cash - for example, at auction - and you want to let the property, you can use a Day 1 remortgage to switch it to a buy to let mortgage shortly after the purchase. 

Doing this can help you avoid tying up all your cash in an investment property, allowing you to free up funds for other opportunities. 

Because you’ll likely want to move quickly, working with our experienced mortgage advisers can help speed up the process and ensure you find the best remortgage deal to suit your needs.

When Can I Apply for a Day 1 Remortgage?

Essentially, you can apply for a day 1 remortgage between day one and the end of month 6 after purchasing a property. If you wait longer than 6 months, you can apply for a normal remortgage.

Are the Interest Rates Higher on a Day 1 Remortgage?

Day 1 remortgages offer much the same interest rates as other mortgage products. What will impact your application are factors such as your credit history and equity in the property. 

Your credit history will be reviewed when the lender conducts a credit search. If you have a history of poor credit or issues with managing your finances, this could influence the terms of your Day 1 remortgage, including the interest rate you’re offered. 

The equity you have in the property acts as a form of deposit; the more equity you hold, the stronger your position will be when applying. 

Other factors lenders will consider include: 

  • The type of property you’re looking to remortgage
  • The reason for your remortgage
  • Whether the property is for residential use or a buy to let investment

How Long Does It Take to Get a Day 1 Remortgage?

Once you have applied, it typically takes around 4 - 6 weeks to receive formal notice of a mortgage offer. 

If you’re applying for a day 1 remortgage, you may want to consider using the services of a mortgage broker. An experienced broker has in-depth knowledge of the mortgage industry and can apply for products you’re most likely to be approved for. 

If time is of the essence, the professional support of our advisers at John Charcol can help keep the process moving quickly and efficiently. You’ll also have the confidence that your application has been thoroughly completed by mortgage experts.

Which Providers Are Day 1 Remortgage Lenders?

A day 1 remortgage is a niche product that only some lenders offer, so it can be difficult to research effectively online. Therefore, it’s best to use a mortgage broker like John Charcol if you’re looking for a Day 1 remortgage as we can point you towards the right providers with criteria that’s compatible with your situation.  

Get a Day 1 Remortgage 

Day 1 remortgages can help you raise funds to complete building work, pay out other inheritors, or expand your property portfolio. Whatever your reason for seeking a Day 1 remortgage, it’s likely you’ll want to move quickly. Having an expert like John Charcol to support your application and guide you through the process can help ensure everything runs smoothly and efficiently. Contact us on 0330 433 2927.

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Compare remortgage rates and deals with our mortgage comparison tool and discover how this type of mortgage works, the process and if it’s suitable for you.

9 Reasons to Remortgage

Read our nine reasons why you should consider remortgaging your home. You can save a lot of money on remortgaging, so make sure you get the best deal.

Remortgaging Guide

Remortgaging means to switch to a new deal with a different lender but stay in the same property. Learn about remortgage costs, valuations and see our advice.

Remortgage Calculator

Here you’ll find our free remortgage calculator which helps you work out how much you could potentially save each month if you remortgaged onto a new rate.

How to Find the Best Remortgage Rates and Remortgage Deals

Learn how to find the best remortgage rates & remortgage deals here. We go through what to consider when comparing deals, which lenders there are & more.

How Much Can I Borrow on a Remortgage?

Find out how much you could borrow on a remortgage in our guide. We go through how lenders determine what to lend you, how LTVs work and more.

Should I Remortgage Now?

Not sure whether now’s the time to remortgage? Find answers to all your remortgage questions.

Interest-Only Calculator

Try our interest-only calculator to work out how much your monthly interest payments will be based on what you want to borrow and your mortgage rate.

Mortgage Glossary

On this page you’ll find our detailed mortgage terminology glossary. There’s a lot of jargon out there but we’re here to make it easy.

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There are many valid reasons to remortgage. If you’re considering remortgaging your home but need help finding the right option for you, contact John Charcol. Our team of experienced mortgage advisers can recommend a range of remortgage options to suit you. Request a call back or call us on 0330 433 2927 to get in touch.

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