Can you remortgage Within 6 Months after purchasing a property?
Six months seems like quite a short time frame to request a new mortgage, particularly if you’re invested in rather lengthy mortgage terms as it is, but here are the facts: it’s possible to get a remortgage within this time frame, although it will only sometimes be possible and depends on your lender.
Okay, let’s go into more detail about remortgages within six months so that you can get a better understanding of how they work.
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The 6-Month Mortgage Rule
The 6-month mortgage rule is relatively straightforward: mortgage lenders can’t get new mortgages for properties they’ve had for less than six months (known as day one remortgages). Lenders begin the six-month countdown based on the date you were registered as the owner with the Land Registry. This rule is imposed by the Council of Mortgage Lenders.
But why does this rule exist at all? Before the global market crash of 2008, lenders offered high LTV rates, and there weren’t a lot of regulations surrounding mortgages. So, property investors would get themselves a mortgage and then immediately apply for a remortgage with another lender with a higher-than-purchase price valuation: they’d borrow back their deposit.
But during the crash, lenders went broke, properties were repossessed, and it was discovered that they were worth less than outstanding mortgages, creating further loss of money for banks. So, it’s easy to see why this rule was imposed to end these back-to-back transactions.
Day One Remortgages
A day-one remortgage is when someone wants to remortgage during the first six months of owning their property. These types of remortgages are quite uncommon and are rarely given out anymore. You may find a lender that’ll offer you this, but they’re few and far between.
Can I Remortgage Early Without Receiving A Penalty Fee?
It’s not possible to avoid early repayment charges when you’re remortgaging, and the only way to prevent them is to wait for your mortgage to end. But it’s always a cost-benefit analysis: if the mortgage you’re switching to will save you more money in the long term, the fees are worth it.
When To Remortgage Within 6 Months
Okay, so now that we’ve covered the 6-month mortgage rule, we’ll consider why it is that you might need to remortgage within six months. Here are a few circumstances that may make it necessary:
- It was impossible to get a mortgage for your uninhabitable property initially, but you developed it, and it’s eligible for a mainstream mortgage.
- While you originally bought your home for yourself, you’d like to rent it out now and want to get a buy-to-let mortgage.
- You’d like to buy someone out of your current mortgage.
- After completing renovations, you may want to borrow against the new value of your property.
- While initially, you took out a self-build mortgage, the property is now complete, and you’d like to get a standard mortgage.
- There’s been a significant change in your financial situation, and you need to change your mortgage.
- Because of rising interest rates, you’d like to change from a variable to a fixed-rate mortgage loan.
Whatever your reason, you’ll have to discuss the terms of your mortgage with your lender to determine your eligibility and consider costs. Remember that generally, as is the case with many lenders, fees will be at their highest during the first year of ownership.
Fees to Expect
When remortgaging property within six months, there are quite a few fees mortgage lenders should anticipate; these include:
- Early repayment charges
- Legal fees
- Valuation fees (if you have your property value revalued)
- Arrangement fees
- Mortgage exit fees
Eligibility Requirements
There are many lenders and mortgage brokers out there that will accept a remortgage application within six months; however, they’d most likely require clarification regarding the reason for your application. In addition, you might need further documentation, such as:
- Invoices for work completed as evidence for increased valuation.
- A statement from your solicitor confirming the property’s purchase price.
- In compliance with Anti Money Laundering Regulations, an audit trail of purchases.
- Any other documents as requested by your lender.
How To Get Started
So, how do you get started with the process of getting your remortgage? We’ve outlined the first steps you should take.
Step 1: Putting Your Finances in Order
The remortgage process won’t differ from when you applied for the initial mortgage: you’ll need your credit history, proof of income, bank statements, and other relevant documents.
Getting this all together is a good start.
Step 2: Decide On a Mortgage
Next, you’ll need to decide, with your lender, which mortgage you’d like to get. For example, switch to a fixed-rate mortgage if you’re trying to avoid rising interest rates. Or, if you’re looking to rent your property instead of living in it, you’ll want to get a buy-to-let mortgage.
Step 3: Provide Needed Documentation
Most mortgage lenders need to understand why you’re remortgaging, and this is where the additional documentation, such as what I listed earlier, becomes necessary. For example, if you want a new mortgage because you’ve put a lot of work into your home, your lender might need an invoice for work completed.
Our Tips
How about smoothing out the remortgaging process? These are our top tips for doing precisely this:
- Keep your credit score positive: don’t take on debts you can’t afford to pay back; only use credit when you need something.
- Keep evidence of all work you have done on the house for your mortgage brokers.
- Give yourself time to get your remortgage lined up, preferably up to six months in advance.
Remortgaging a Buy-To-Let Property
The process of remortgaging a buy-to-let property is the same as a residential property; however, lenders may be stricter about the 6-month mortgage rule. They’ll want at least six months or more before even considering remortgaging.
Switching to buy-to-let, on the other hand, is even more difficult. While you may have had no issue getting your residential mortgage, you may need help getting your buy-to-let mortgage, specifically if you don’t meet their specific age requirements.
Remortgaging Fixed-Rate Properties
We’ve mentioned that you can change from a variable to a fixed-rate mortgage, but what about getting a remortgage while still in a fixed-rate period? Well, while you’ll have to make early repayment charges, you will be able to get one.
There are times when a mortgage doesn’t have early repayment charges but instead has lender arrangement fees.
FAQs
Can you remortgage within six months?
Yes, you can remortgage within six months, although it is more challenging than remortgaging later: it all depends on your lender and their criteria and requirements.
What is the 6-month mortgage rule?
Imposed by the Council of Mortgage Lenders, the 6-month mortgage rule stops you from remortgaging a property within six months of buying it. The six months start on the day that you were registered as the owner of the Land Registry and not necessarily the purchase date.
How long do you need to wait before remortgaging?
You should wait at least six months before remortgaging, as most lenders will only let you switch to a new deal once you’ve had your mortgage for at least six months.
However, you can consult with your mortgage broker to determine how long you should wait in your specific case.
How soon can you remortgage after remortgaging?
You can remortgage as many times as you want to, technically. But, you may be restricted by your lender and their terms.
How much money will I get if I remortgage?
Typically, a homeowner will borrow the equivalent amount of the current outstanding loan for a remortgage. However, they may borrow more if their property value has been revalued after renovations.
Can you remortgage with the same lender?
You can remortgage with the same lender, although this may not be called a remortgage but rather a “product transfer”. It may be preferable to remortgage with the same lender, mainly if you’ve previously worked with them for other properties.
Contact Your Remortgaging Experts
If you’re looking for help with your remortgage, look no further. As mortgage brokers, we’re well-equipped to guide you and put you in the capable hands of one of our many trusted lenders.
We’ll ensure that you only get the best mortgage deal for your remortgage. Contact us at 0808 301 9509 or fill out our contact us form for a quote. We aim to get back to you within 2 hours from Monday to Friday during workout hours and within 4 hours over the weekend and on bank holidays.