In recent years, data shows most homeowners choose to remortgage with the same bank as a product transfer when their fixed-rate term ends. Homeowners have two choices: remortgaging with the same lender or getting a new mortgage with a different lender. If you are unsure which route suits your circumstances, speaking with an experienced Mortgage Broker Slough can help you weigh both options clearly before making a decision.
Mortgage product transfer works best if you want a simple, fast, and paperwork-free process. If you want to explore the market and look for the lowest rate possible, you may find a new lender that gives you a better deal.
This doesn’t mean that a product transfer won’t get you a suitable deal. It will all depend strictly on your circumstances, what will suit you best.
This guide will help you understand mortgage product transfer, its process, and the implications that help you remortgage with the same lender seamlessly.
What Is A Mortgage Product Transfer?
A mortgage product transfer is a form of remortgage where you get a new mortgage deal with the same lender. At the end of your existing mortgage fixed term, your lender offers you to change to another fixed period. In this process, your mortgage account number stays; no solicitors are needed for this arrangement.
Lenders use different terms to refer to mortgage product transfer, such as:
- Product switch
- Internal remortgage
- Rate switch
- Existing client’s deal
How does a mortgage product transfer work?
Mortgage product transfer is a much smoother process compared to the standard remortgage to a new lender.
Here are the main steps involved:
1. First Contact: Your lender will contact you 3 or 4 months before your deal expires.
2. Rate options: Based on your LTV (loan-to-value) ratio, the lender will give you the suitable rates you are eligible for.
3. Request Submission: You will need to formally submit a product transfer request once you have finalised. This can be done through an app, a simple online portal or through a mortgage broker if you are using one.
5. New Offer: In a day or two, the lender will officially issue a new mortgage offer.
6. Rate Switch Complete: Your mortgage will automatically shift to the new deal at the chosen rate switch day. This will end the current mortgage rate.
When can you secure a new rate?
Most mortgage lenders let you reserve a new mortgage rate in advance, ideally before 3 to 6 months. This helps you lock in a suitable deal. If the interest rate goes down after you reserve but before your new deal starts, many lenders also allow you to switch to a lower rate.
Mortgage Product Transfer Vs. Full Remortgage
Both these terms are used for remortgaging. While mortgage product transfer involves remortgaging with the same lender, a full remortgage is about switching to a new lender.
Here is a quick comparison table for the two remortgage options:
| Feature | Product Transfer | Full Remortgage |
| Lender | Same | New |
| Timeline | 1–3 Weeks | 4–8 Weeks |
| Legal Work | Not required | Required |
| Valuation | Not needed | Usually needed |
| Credit Check | Soft or none | Hard |
Before making a final choice, you should be aware of any hidden costs associated with your new mortgage deal.
For example, your current lender offers you 4.5% on a £250,000 mortgage product transfer. You find a new lender ready to offer 4.2%. Here, a full remortgage gives you a benefit of £750 per year.
However, you are asked to pay £1,000 as the full remortgage cost (solicitors, valuation, etc.). At this rate, you will break even in around 16 months.
Now, if you are planning to fix the rate for 5 years, a full remortgage is a better option. If you are fixing only for 2 years, you may not see any savings.
Benefits of mortgage product transfer
Mortgage product transfer offers these benefits to homeowners in the UK:
No hard credit checks
This is true for most cases. As you already have your mortgage with the same lender, they will only check your “internal account conduct.” If you have made all your payments on time, they are less likely to conduct a hard credit check.
No property valuation
Most lenders use the Automated Valuation Model (AVM) for mortgage product transfers. They may also continue with the valuation they already have in their records.
No Solicitor Needed
This is an internal administration change. As the new charge does not change hands, you won’t need a solicitor for the deal. You can save a lot on legal fees here.
Quick Procedure
Remortgaging with the same lender is much faster than finding a new one. The entire process won’t take more than 1 to 3 weeks (as opposed to 4 to 8 weeks for a full remortgage).
Drawbacks of a mortgage product transfer
Limited rate range
You may not get the best mortgage range when you stay with the same lender. It limits you to your current lender’s rate range, which may not be the most affordable in the market.
Difficulty in adding/removing borrowers
You cannot easily add or remove a person during a mortgage product transfer. You need a Transfer of Equity for this, which will trigger a complete re-application and a new credit check.
When is a full remortgage the right choice?
Here are the scenarios where getting a full remortgage makes more sense:
- Other lenders offer significantly better rates
- You want to extend your mortgage term
- You want to shift from repayment to interest-only (or vice versa)
- Your financial health has significantly improved
- Your property’s value has increased, and you are in a better LTV band
Even smaller renovations like adding value to your home can push you into a more favourable LTV bracket, making a full remortgage a worthwhile consideration.
How much does a mortgage product transfer cost?
Typically, a mortgage product transfer does not involve a valuation or legal fee. You can also avoid brokerage by working with a fee-free mortgage broker in the UK.
However, lenders charge product/arrangement fees on some mortgage rates (usually up to £1,999) for this switch. This charge is either added to the mortgage or paid up front.
Can your mortgage product transfer be declined?
Yes, in specific scenarios, your existing lender may decline your mortgage product transfer request. They can do so if:
- You have missed multiple mortgage repayments
- You are planning to let without renewing your mortgage as a buy-to-let (BTL)
- Your property has had a change of use
- The lender realises you have an active bankruptcy
- (In rare cases) Your lender withdraws from the market
Always seek professional help while remortgaging with the same lender. While a product transfer has multiple benefits, not making an informed decision can hamper your long-term financial well-being.
