It’s usually a good idea to look at your mortgage options each time the interest rate deal you are on starts to get close to ending.
Lenders will notify you of this 60-90 days in advance, so there’s plenty of time to decide.
Remortgaging with your current lender is easier and quicker than changing mortgage providers, and plenty of homeowners do it.
But is it the right choice?
What is a mortgage product transfer?
Many homeowners are familiar with the term ‘remortgage‘ but are less sure about a ‘product transfer‘.
If this is you don’t worry, you’re not alone and we will help you to understand what this involves and whether it is a good idea, or not.
A mortgage product transfer is when you move from one interest rate product, to another, but stay with the same lender.
We cover ‘why’ you might want to do this further down the page.
Here’s a quick example:
- You took out your current mortgage with the Halifax and initially chose a 2 year fixed rate
- Now this fixed rate is getting close to ending, if you do nothing your interest rate will change to the much higher Halifax SVR
- Halifax have written to you explaining this but have also offered you two other options
- Another 2 year fixed rate
- Or a 5 year fixed rate
If you choose either option 1 or 2 this is a remortgage with the same lender, or a product transfer. Importantly, you stay with the Halifax.
How is this different to a remortgage?
The end result is a similar outcome: you have a mortgage on a new interest rate deal, or product.
With the product transfer you will still be with the same lender.
With a remortgage you will move to a new lender but also have the opportunity to change your mortgage term, repayment method and even the loan amount.
The other difference is the amount of choice you have.
By staying with your current lender you probably have 3 or 4 interest rate options to consider. By looking at a remortgage you will have hundreds of choices, with the possibility that some are much cheaper.
What are the advantages of a product transfer?
FEES & COSTS
The arrangement fees for the new product could be lower and you won’t have to worry about legal fees or valuation fees.
SPEED & SIMPLICITY
This is generally the one that borrowers see as the main advantage. There’s very little for you to do. Just decide which interest rate you would like, let your lender know and they will make the switch. Easy!
VALUATION
As you are not borrowing anymore money most lenders will not need to obtain a valuation.
FINANCIAL UNDERWRITING
Most lenders will not require any personal or financial information from you so there’s no need to prove your income. This could work in your favour if your financial situation is not quite as strong as it was. For this to happen you must have kept up with your monthly repayments.
What are the disadvantages?
CHOICE
You will only have a couple of choices from one lender. A mortgage broker could find hundreds of deals.
PAYING TOO MUCH
If you don’t get the best deal from the whole mortgage market then you are paying over the odds and this could add up to quite a large sum.
MORTGAGE CHANGES
A product transfer just allows you to change the interest rate. This means that you cannot change the mortgage term or borrow more money within the same process.
How long does a product transfer take?
Hardly anytime at all. As you are looking to change product it is highly likely that your current product is due to end soon.
Once you have agreed to go ahead and selected an interest rate deal you will also need to pay the product fee or arrangement fee. Then your lender will start the new deal as soon as the current deal ends.
If you are already on the SVR and choosing a new deal it may be a few weeks before it starts.
Read more: How long does a remortgage take with the same lender?
Do I need a solicitor?
There is no need for a solicitor or conveyancer for a product transfer.
It is a simple change of interest rate product while remaining with your lender.
This does not require any legal work concerning the Land Registry or your lenders charge against the property.
Read more: Do you need a solicitor to remortgage?
So what’s my best option?
It would be almost impossible for us to suggest which option is best for you just based on this one page. Everyone’s circumstances and needs are unique.
Remember that you are not obliged to stick with your current lender. Most homeowners will have many different lenders during the course of their mortgage term.
It may well be that your requirements dictate which option you choose:
PRODUCT TRANSFER
- If you just want a no fuss transfer to a new interest rate
- You need it changing quickly and without delays
- Your financial situation means that you would not qualify for a remortgage
RE-MORTGAGE
- You want the best possible deal
- You need to change who is on the mortgage (TOE)
- You would like to borrow some more money
What’s the difference between a product transfer and porting?
Product Transfer
Stay with your current lender
Choose a new interest rate
Move house
Need to apply for a new mortgage
You are choosing a new interest rate with the same lender but without moving.
PORTING A PRODUCT
Stay with your current lender
Choose a new interest rate
Move house
Need to apply for a new mortgage
You are moving house with the same lender and taking your interest rate deal with you.
Do I need a mortgage broker?
With regards to a mortgage product transfer, you don’t need a broker to make this change. You just need to tell the lender what rate you would like.
The problem with this option is that you are not receiving any independent advice concerning your mortgage choices. Not from the lender and not from a broker.
While it may seem a simple choice between interest rate A, B or C, there is a bit more to it.
SUITABILITY – What this means is how suitable is the deal for your situation now and during the term of the product (2, 3, 5 years etc)? If you intend moving during this period then your current lender may not lend to you again if your financial situation is weaker.
CHOICE – Remortgaging to a new lender is a bit more involved, but it could save you thousands by finding a better deal and a lower monthly repayment.
So what could a mortgage broker do? – An independent mortgage broker will first want to understand your current situation and what you may have planned over the next few years.
You may want to:
- Get married
- Start a family
- Build an extension
- Borrow extra money for a buy to let
- Reduce your mortgage size
- Change the repayment method
- Let your property out
Some of these options may not be possible with your current lender. Your broker will be able to identify this and suggest an alternative lender that will be able to help when the time comes.
A broker will have access to the whole mortgage market, many thousands of different deals and some only available to brokers. This expands your choices when searching for the best option, whether this is for cost or practical reasons.
If it’s the best one for you, your broker will be more than happy to liaise with your lender to make sure any product transfer fits your needs and it set up correctly, saving you time, money and energy.
FAQ
Frequently Asked Questions
Is a product transfer the same as a remortgage?
No it’s not quite the same. A remortgage normally involves changing the lender.
Will I need to pay for a solicitor?
A mortgage product transfer does not need a solicitor.
Can I borrow more money?
No. This would need to be done separately, by applying for a further advance.
Will I need a mortgage broker?
You can do it by yourself but a broker can help and will be able to check to see if there are any better rates from a new lender.
What happens if I don’t do anything?
Then your interest rate will change to the lender’s standard variable rate (SVR).
Can I get a fixed rate?
This will depend what types of interest rates that your lender has available for existing borrowers.
