Most mortgage borrowers have a fixed rate mortgage.
The interest rate is fixed for a set number of years and you know exactly how much to budget for. But when these rates come to an end you have to decide what to do next.
If you do nothing (not recommended), then your interest rate may be changed to the lender’s Standard Variable Rate, or SVR. This will be their least competitive rate and most people need to avoid it.
Thankfully, you do have some options and an opportunity to transfer your mortgage to a better deal. In this article we look at remortgaging with the same lender, including how the process works, whether it’s a good idea and how long a remortgage normally takes.
Can you remortgage with the same lender?
Yes you can, and remortgaging with the same lender is pretty simple to do.
As you have already been approved for the mortgage you have now, there’s very little checks and paperwork.
A few months before your interest rate deal is due to finish, your lender will write to you with some product transfer deals that you can switch to.
They won’t want to lose you as a customer, but this doesn’t mean that they will offer you the cheapest rates around.
It’s always worth comparing a mortgage product transfer to rates available elsewhere.
What is a product transfer?
A Product Transfer is when you switch interest rates (products), without changing lender.
The process is sometimes referred to as ‘remortgaging with the same lender‘, which we feel is a bit confusing.
A mortgage product transfer involves moving from one rate to another, and nothing else.
It’s quick and normally low cost.
During 2022 1.23m mortgage borrowers took advantage of a product transfer.
How long does it take?
Not long at all actually.
A standard remortgage to a new lender will take around 4-8 weeks on average.
But a mortgage product transfer (without moving lender) can be completed in just a few days.
Even though this is super quick, you should still look to review your options around 3 months before your current interest rate is due to finish.
The reason for this is that it may be better for you to move to a new lender. If this is the case then you need to allow the 4-8 weeks for the new mortgage to be ready.
Why would you remortgage with the same lender?
If you don’t need to make any changes to your mortgage, then staying with the same lender usually makes sense.
It’s quick and there’s very little paperwork involved.
This is handy if you’ve forgotten, or are not that bothered!
The process is a bit like your car insurance. Each year you receive your insurance renewal. It normally costs more than the previous year. If you shop around you can usually find a better deal to switch to. But if you don’t want to do that then you stay with the same company.
Remortgaging with the same lender is undoubtably very convenient, but it is not always the best option. Just take some time to check the alternatives before you decide.
Product transfer benefits
Mortgage product transfers are incredibly popular with borrowers.
It was not that long ago that the renewal deal offered by your current lender was expensive and lacked any real choice. In fact, there were lots of lenders who did not provide any choices!
It was the good old Standard Variable Rate (SVR), or nothing!
Thankfully, things have changed for the better and lenders now offer a range of deals to keep you with them.
Here are some of the benefits of remortgaging with the same lender:
Speed
It takes no time at all for your switch to be put in place.
Most product transfers are done online, in just a few minutes, and the rest happens automatically.
Cost
There are costs involved in switching a rate, typically a product fee payable to the lender.
It’s normally comparable to a remortgage product fee. But overall the initial costs are lower.
Simplicity
It couldn’t be simpler! This is a reason given by many borrowers when selecting a rate transfer.
This simplicity does have to be balanced against the financial savings from a more competitive deal.
Credit checks
There aren’t any!
If you have picked up some poor credit recently then remortgaging to a new lender could be a bit tricky. Fortunately, this will not be a problem with an internal product transfer.
Affordability
Affordability does definitely matter with your mortgage. But a transfer does not require any income or affordability checks.
So if you have recently changed jobs, or gone self-employed, then this will be in your favour.
Would switching to a new lender be better?
In some cases, yes.
It really depends on what you want from your mortgage and how competitive the rates are.
CHEAPER RATES
If you can find a mortgage that is substantially cheaper elsewhere, then you could be better off by moving to a new lender.
BORROW MORE
A product transfer does not allow any changes to the mortgage, including borrowing more money. If your lender can’t offer the extra money you need then it’s possible that a new lender will be able to help.
CHANGING BORROWERS
Should you also wish to change who is on the mortgage (transfer of equity), then remortgaging to a new lender is a popular way to do it, while choosing a new rate at the same time.
CONTACT A REMORTGAGE EXPERT
If you wish to investigate your re-mortgage options we can put you in touch with a fully qualified whole of market mortgage broker.
How do you apply?
Applying for a product transfer is incredibly easy.
Before you do, it’s important to check out the rates on offer from other lenders. It can be tempting to just stick with the same lender for a few more years but there could be cheaper deals out there.
Ask your mortgage broker to search for any better rates. Even if you end up staying with your lender, at least you will know you’ve got a good deal.
If you decide that the rate transfer is the best option, you just need to inform your lender. This is normally done online, with a simple form.
A difference of just 0.50%pa on a £400,000 mortgage means you will pay £2,000 more in interest. That’s £2,000 each year and £6,000 over a typical three year period.
Do you need a solicitor?
If you are just switching rates via a Mortgage Product Transfer then a solicitor will not be needed.
Staying with the same lender doesn’t involve any conveyancing legal work, it’s one of the reasons it doesn’t take very long.
Does it involve credit checks?
Staying with your current lender won’t normally involve any credit checks or affordability checks.
This is a big advantage if your credit score has slipped a bit recently, or if you have just changed jobs.
Can you remortgage to a different lender?
A lack of choice is the main drawback of staying with the same lender.
As we have just mentioned, there will be situations where moving to a different lender is the better option.
This will involve applying for a remortgage.
You will need to meet the new lender’s eligibility criteria, your broker will have checked this before suggesting a specific lender.
Typically this would include:
- Your income and affordability
- Your loan to value
- Property type
- Credit profile
As you are making an application for a new mortgage, you have the opportunity to make some changes to how your mortgage is setup.
This could mean:
Mortgage amount
Many borrowers use a remortgage to borrow more money, perhaps for home improvements or debt consolidation. (You can also choose to borrow less)
Mortgage term
You can amend the mortgage term. By extending it for a few years you can make the monthly repayments more affordable.
Interest rate
Not only can you choose a new rate, you can change the type of interest rate if you want to: Fixed, tracker, variable, discounted.
Repayment method
Move from repayment to interest-only or vice versa. Many lenders will allow you to have a ‘part and part mortgage‘, which combines repayment with an interest only amount.
The borrowers
Changing who is on a mortgage is called a transfer of equity. Remove someone, add someone, or do both at the same time!
Other features
Find a lender that offers other features that you need. For example; the ability to make overpayments or use some savings to offset the mortgage interest.
The next steps
It’s important to take charge of your mortgage, and not to ignore letters from your lender warning you that the rate is soon to expire.
Take the opportunity to fully review your mortgage and ask an independent mortgage broker to see if there are any better deals around.
A qualified broker can help arrange your product transfer or remortgaging to a new lender. So they take away most of the hassle and grief.
But how long your remortgage will take will depend on what option you choose:
- Product transfer – Just a few days
- Full remortgage – 4 to 8 weeks
If you would like to speal with an independent mortgage broker, please call us on 0330 030 5050 or click the button below. We will arrange for a fully qualified broker to contact you for a free initial chat.
Applying For A Mortgage
We explain what happens at each step, including what documents are needed and how a mortgage broker can help.
Remortgage Guide
Our Guide covers the remortgage process, including how long it takes, and the different options you have when switching your mortgage.
Mortgage Broker Guide
In this guide we’ll take a look at what mortgage brokers do, how they can help you, how they get paid plus tips on how to find a good one.
