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Based on your yearly income,
you may be able to borrow
Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.
Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.
Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.
Day One Remortgaging Explained
The business finance broker team often hears from clients who want to remortgage straight after completing their house purchase.
This remortgage product is called a 'Day One Remortgage', and we have created this guide to explain what this remortgage is, and when it can be beneficial.
What Are Day One Remortgages?
This type of remortgage is usually taken out as early as one day after your mortgage becomes finalised, and you are the new owner of a property.
Usually, a mainstream lender will place a minimum cap of around six months on a new mortgage, and sometimes up to a year. That means you cannot take out a remortgage with a high street provider within six to twelve months of completion.
The 'six-month rule' refers to a new policy imposed after the credit crash in 2008, with the idea being that homeowners need to be protected from the potential of negative equity.
In some cases, a day one mortgage might make sense - and there are lots of reasons why clients are looking for a day one remortgage.
Given the demand, several niche lenders do now offer this type of remortgage, which is provided within strict guidelines as set out by the Council of Mortgage Lenders (CML).
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Scenarios When a Day One Remortgage is Beneficial
The following examples illustrate why some homeowners apply for a day one remortgage:
- They purchased a property quickly, via auction or to secure a property before another offer could be made. This purchase could have been completed with borrowed cash or at a less competitive rate, and a new mortgage is needed quickly to repay the borrowing.
- Property has been received as an inheritance, and you want to remortgage it quickly to raise funds against your new home.
- You have bought a property using your own cash, and now need a remortgage to cover the value paid.
When Can I Apply for a Day One Remortgage?
You can apply for this sort of mortgage any time within six months of purchasing a new property. After six months, you can usually find a better remortgaging option with a lower interest rate.
If you think a day one remortgage is the best option for you, give us a ring, and we'll run through the options available.
How Does a Day One Remortgage Work in Practise?
The process isn't vastly different from a normal remortgage; the most significant difference is that you need to prove that you own the newly acquired property.
Usually, a new property acquisition won't show at the Land Registry straight away, in which case you can request verification from your solicitor.
You can take out a day one mortgage on a variety of bases:
- Against residential or investment properties.
- As interest-only, or on a repayment basis.
The LTV (Loan to Value) will change between lenders. Typically, you will find an LTV of up to 75-85%, although specialist lenders can lend as much as 90-95% of the property value. In some circumstances, you can even secure a day one remortgage at 100% of the property value.
What Interest Rates are Charged for a Day One Remortgage?
The best way to reduce your interest charges is to submit a strong application, with all the supporting information, and to lenders whose criteria you meet.
Affordability is always important, as a lender needs to know you can afford the repayments before making an offer to lend.
Again, the rules change between lenders, but most will look at your annual income and multiply this to arrive at a maximum lending figure. The standard is a cap of 4.5 times your annual salary. Niche lenders can offer up to five times your income, with some even as high as six times, depending on the scenario.
What Factors Impact the Rates on a Day One Remortgage?
Lots of different factors will impact the rates you are offered:
- Type of property - a property that is a listed building, or of non-standard construction (e.g. has a thatched roof) is higher risk, and therefore harder to remortgage. Contact the Revolution team for help with remortgaging an unusual property.
- Credit history - if you have a bad credit record, then it is likely that you will need to use a broker to find a bad credit lender, and the rates offered will be higher than those for an applicant with a clean credit record.
Expert Support with Day One Remortgages
Day one remortgages are a specialist type of lending, and therefore it is vital to work with an experienced broker who understands the mortgage market and can make independent recommendations.
If you would like to find a day one remortgage, or learn more about the borrowing options available, call Revolution Brokers on 0330 304 3040 or send a message to [email protected].
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As specialist mortgage brokers for a huge variety of applicants, the whole-of-market consultants at Revolution provide access to an exceptional range of lenders, products and mortgage deals. That means you get the advantage of professional negotiation and broker-exclusives through an established lending network to ensure we always find you the most competitive mortgage available.
The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.
We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.