Day 1 Remortgages Explained

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 option is right for you.

What Is a Day 1 Remortgage?

At its simplest definition, a day 1 remortgage is when a homeowner switches their mortgage within the first 6 months of buying the property. You can apply for a day 1 remortgage on or after completion.

Up until the financial crash in 2008, remortgaging a property within the first 6 months was not unusual. Post-crash, this practice has become much less common to protect lenders from incurring huge losses. Some buyers had bought a property at a discount and then remortgaged within the first 6 months of ownership with a larger home loan. This resulted in the property owner having none of their own capital invested in the property. During the financial crash, many of these properties went into negative equity, and if the owner defaulted on their payments, the lender could end up repossessing the property at a loss. 

However, despite its interesting history, the day 1 remortgage is still available in certain circumstances. Several niche lenders offer this type of remortgage which is governed within strict guidelines set out by the Council of Mortgage Lenders (CML).

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. 

Can I Get a Day 1 Buy-to-Let Remortgage?

Day 1 remortgages are often used for buy-to-let reasons. If you’ve purchased a property quickly with cash – e.g. at auction – and you want to let this property, you can use a day 1 remortgage to remortgage it onto a buy-to-let basis soon after the purchase. Doing this can essentially save you from using all your cash on an investment property. Because you’ll want to move quickly, using our experienced mortgage advisers will help speed up the process and ensure you find the best mortgage deal.

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.

Which Providers Are Day 1 Remortgage Lenders?

It’s best to use a mortgage broker like John Charcol if you want a day one remortgage, as it’s a niche requirement that only some lenders offer, so it’s not very easy to research online.

Day 1 remortgages can help you raise funds to complete building work, pay out other inheritors, or continue your property portfolio. Whatever the reason for your day 1 remortgage, it’s likely you want to move quite quickly, so have an expert like John Charcol support your application and guide you through the process.