The 6 month rule

If you’re following the Buy - Refurb - Resell or Refinance strategy you are likely to come up against the so-called ‘6-month rule’.  There is some confusion about what exactly this ‘rule is.

In truth there’s no such rule - it’s simply a practice that some lenders have adopted.  The problem it creates is that those lenders will require you to have owned a property for six months before they will consider a remortgage - or, if you’re selling it, will be willing to offer a mortgage to your buyer. 

If you’re doing a refurb with a view to refinancing onto a BTL mortgage then the simple solution is to get bridging finance for the first six months to cover the period of refurb and then refinance.  However, it gets tougher when you’re planning to sell the property quickly.

Does this mean that you can’t sell it?

Not at all.

If you’re selling to investors or landlords, it’s less of a problem as they have access to a range of lenders but the cheapest of them are likely to impose that 6 months ownership restriction.  Most investors have a good broker who can always find the right solution.

Likewise, people who are just looking for their next home won’t have access to all the lenders on the market in the first place, simply because they don’t have the knowledge and contacts.  if you’ve owned less than 6 months this will reduce their options and may end up costing them more as those lenders willing to offer a mortgage may ask for higher rates.  

It comes down to how much they fall in love with your property.  While investors usually buy based on due diligence home buyers make their buying decision based on emotion.  

A successful sale can depend on how and to whom you’re selling the property.  If you’re selling it through an agent, they will probably have access to a mortgage agent or broker and can help the buyer to find the right deal.

Transparency is essential.  Especially if your buyer is a first-time buyer who is likely to get spooked by the smallest thing.  If they find out you’ve been less than transparent, they’re likely to wonder what else you are hiding.  It’s important that the buyer, the estate agent, the lender and the solicitor are all aware of your situation.

If your strategy is to transform nasty houses into lovely homes you need to know how to negotiate the 6=month rule.

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