Day One Remortgage

A day one remortgage is when you remortgage a property within six months of purchasing it, bypassing the standard waiting period that most lenders impose. This is a specialist product used mainly by property investors, landlords, and buyers who purchased at auction or with bridging finance. Understanding how the six month rule works, which lenders ignore it, and what the typical use cases are will help you plan your exit strategy before you complete your purchase.

What Is the Six Month Rule

The six month rule is a guideline, not a law. It originates from recommendations by the Council of Mortgage Lenders (now UK Finance) and is designed to reduce the risk of mortgage fraud and money laundering. Under this guideline, most mainstream lenders will not offer a remortgage on a property until at least six months have passed since the HM Land Registry registration date.

The rule exists because, historically, some buyers would purchase a property cheaply, artificially inflate its value, and immediately remortgage to extract cash. By requiring a six month holding period, lenders reduce their exposure to this type of fraud.

Who Needs a Day One Remortgage

There are several legitimate scenarios where remortgaging before six months makes financial sense.

Auction Purchases Funded by Bridging Finance

Auction purchases typically require completion within 28 days. Most buy to let and residential mortgage applications take longer than this, so buyers often use a bridging loan to complete the purchase and then remortgage onto a standard product as quickly as possible. Bridging finance is expensive, with rates typically starting at 0.5% to 1% per month, so every extra month of delay increases costs significantly.

Cash Purchases Followed by Refinancing

Some buyers, particularly investors, use cash to complete a purchase quickly and then remortgage to release that capital for the next acquisition. This is common in portfolio building where speed gives a competitive advantage at auction or in negotiation with motivated sellers.

Inherited Property

If you inherit a property that is mortgage free, you may want to remortgage it to release equity for renovations, to buy out other beneficiaries, or to fund other investments. There is no purchase date in the traditional sense, which some lenders treat differently, but the six month rule can still apply from the date the property transfers into your name.

Below Market Value Purchases

Buying a property below its market value, for example from a family member or at a distressed sale, can mean the property is worth more than you paid on day one. A day one remortgage allows you to borrow against the true market value rather than the discounted purchase price. Not all lenders will use the market value for a day one remortgage; some will only lend against the lower purchase price.

Buy, Refurbish, Refinance

The BRR strategy involves purchasing a property that needs work, completing renovations to increase its value, and then refinancing based on the improved value. Some lenders will consider a day one remortgage after refurbishment is complete, particularly if the works are substantial and the uplift in value is supported by a new valuation.

Which Lenders Allow Day One Remortgages

Day one remortgages are primarily available from specialist and challenger lenders. No major high street lender currently offers day one remortgage products. The market includes around 15 buy to let lenders that will remortgage within six months, though this number changes as lenders update their criteria.

Some lenders distinguish between properties purchased with bridging finance and those purchased with cash. For bridging exits, certain lenders will remortgage from day one. For cash purchases, the same lender may require a minimum of three to six months of ownership before they will consider the application.

Loan to Value and Rates

Day one remortgage products typically offer a maximum loan to value of 75%, though some lenders extend to 80% or even 85% in certain circumstances. Rates on day one remortgage products are generally higher than standard remortgage rates because the lender is taking on additional risk. Expect to pay a premium of 0.25% to 1% above equivalent standard products.

The valuation basis also matters. Some lenders will use the current market value for the remortgage, while others cap lending at the original purchase price for the first six to twelve months. If you have added value through refurbishment, you need a lender that will instruct a new valuation and lend against the improved figure.

The Application Process

A day one remortgage application follows the same general process as any remortgage, with a few additional requirements.

• Proof of purchase: The lender will need to see the original purchase price and how the purchase was funded (cash, bridging loan, or other finance).
• Source of funds: Anti money laundering checks are more rigorous on day one remortgages. Be prepared to provide a clear audit trail for the funds used to purchase the property.
• Valuation: The lender will instruct a surveyor to value the property. If you have carried out refurbishment, provide evidence of the works completed and their cost.
• Bridging loan redemption statement: If you are exiting a bridging loan, the lender will need a redemption figure from your bridging provider.

Frequently Asked Questions

Is the six month rule a legal requirement?

No. It is an industry guideline that most mainstream lenders follow voluntarily. There is no law preventing a lender from offering a remortgage before six months.

Can I get a residential day one remortgage or is it only for buy to let?

Day one remortgages are far more common in the buy to let market. Residential day one remortgage products exist but are rare and typically only available from specialist lenders. If you are remortgaging your own home within six months of purchase, expect limited options.

How quickly can a day one remortgage complete?

Once approved, a remortgage typically takes four to eight weeks to complete. If you are exiting a bridging loan, factor this timeline into your planning to minimise the overlap period where you are paying bridging rates.

Will the lender use the purchase price or the current value?

This varies by lender. Some use the purchase price for the first six to twelve months. Others will instruct a fresh valuation and lend against the current market value, which is beneficial if the property has increased in value through refurbishment or market movement.

Do I need a solicitor for a day one remortgage?

Yes. A remortgage requires legal work to update the charge on the property at HM Land Registry. Your solicitor from the original purchase may be able to handle the remortgage, which can speed up the process.

Related guides: Remortgage | Buy to Let Mortgages | Buy Refurbish Refinance

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