Some specialist lenders offer Day One Refinance
Some specialist lenders offer Day One Refinance, allowing developers to exit their development loan immediately after completion rather than waiting the 6-month seasoning period most high street banks require.
Some specialist lenders offer Day One Refinance, allowing developers to exit their development loan immediately after completion rather than waiting the 6-month seasoning period most high street banks require.
The 'Six-Month Rule' (originating from the Council of Mortgage Lenders, now UK Finance) is a standard policy among high street banks preventing borrowers from remortgaging a property within six months of acquiring it. This poses a massive hurdle for developers utilizing the Buy, Refurbish, Refinance, Rent (BRRR) strategy, as they must sit on expensive bridging finance for half a year even after the works are complete.
Fortunately, specialist commercial and buy-to-let lenders recognize this inefficiency and offer 'Day One Refinance' products. As soon as the refurbishment is complete and the property is signed off by building control, these lenders will advance a long-term mortgage based on the new, higher Open Market Value (OMV). This allows the developer to rapidly pay off their bridging loan, recycle their initial capital, and move on to the next project without dead time.