A product transfer mortgage is when you remortgage over to a new interest rate but stay with the same lender, usually after a fixed rate has ended.
The term ‘product transfer‘ is predominantly used by lenders and brokers. Certainly for a lender you are transferring from one interest rate product on to a new interest rate product. No other changes are made.
Most borrowers would explain this process as remortgaging with the same lender.
We are now all very used to comparing our energy prices and mortgage prices every few years to see if any savings can made and switching when necessary.
A product transfer is the simplest and quickest way to move from one rate to another.
Not to be confused with ‘porting‘, this is when you move house but stay with the same lender and take your current interest rate deal to your new house.
Why remortgage with the same lender?
For most people it is because remortgaging with the same lender is super easy to do.
There’s no need to fill out any complicated forms or get your property valued. You normally need to complete just one simple form and it’s done!
Choosing a product transfer remortgage can also be very useful when your circumstances have changed. Perhaps you are now self-employed or your household income has reduced since you last applied for your mortgage.
None of this matters. With a product transfer mortgage there are no income checks or credit searches. As long as your mortgage payments are up to date there should be no issues to worry about.
If you don’t do anything then the lender will start charging you their Standard Variable Rate (SVR). Normally the least competitive rate they have!
The product transfer process
The process is extremely simple and most lenders will allow you to do this online.
A few months before your current deal is due to end your lender will contact you to offer some renewal deals. These are designed to start as soon as your current deal ends.
Depending on the lender, you may get to choose from a couple of different fixed rates and some tracker rates, with differing terms. Most of these will have fees attached but there are no valuation or legal fees to worry about.
There’s no need for a credit check, you are not borrowing any more money or making other changes to your loan.
Watch out for when the new rate kicks in. While all of us aim to switch to a more competitive deal, this is not always possible and your monthly mortgage repayments may go up.
Can you be declined a product transfer mortgage?
Quite a few websites talk about being declined for a product transfer due to a failed credit check or poor affordability.
As long as you are not borrowing any more money, lenders won’t carry out these checks. So the information they are giving you is incorrect.
However, if you:
- ask to borrow more money
- ask to extend the term
- ask to change to an interest-only method
- tell the lender you are currently not working
- are in arrears
then expect them to ask lots more questions.
What’s the difference between a product transfer and a remortgage?
With a product transfer you are only changing your interest rate deal. All other aspects stay the same and you remain with your current lender. The process is very simple and should take a week or two.
A remortgage means applying for a new mortgage with a different lender (but without moving house). You will choose a new interest rate deal and may also take the opportunity to borrow some more money or make other changes.
It’s still relatively straightforward as there’s no property chain to worry about.
The process could take 4-6 weeks.
Reasons to choose a product transfer
Speed
Hands down this is the fastest option. As soon as your current deal ends the new one will take over.
Less paperwork
Probably just one or two extremely simple forms.
Lower cost
The initial costs will be low compared to applying for a new mortgage
No underwriting
No income checks and no credit searches. Useful if your circumstances have changed and your credit report may not be looking too good.
Reasons to choose a remortgage
Better interest rate
A product transfer is fast and simple, but there’s no guarantee that it is the best choice financially. Most people remortgage to a new lender for a better interest rate. If you use a broker there will be thousands of deals to choose from.
Borrow more money
You can’t borrow more money with a product transfer but it is a standard option when remortgaging. You could borrow extra for home improvements, a holiday or to consolidate other more expensive debts.
New LTV product
Your property has probably gone up in value and your mortgage has decreased. If this takes you into a lower loan to value band you could pick up a cheaper deal.
Need a different mortgage
Perhaps an offset mortgage or a transfer of equity would be beneficial. If your current lender can’t offer this then an alternative one probably can.
What happens when a fixed rate mortgage ends?
Is your fixed rate mortgage coming to an end? The end of your fixed rate deal is a good opportunity to look at your finances and find yourself a better deal. In this article we explain your options, where to go for advice and discuss what you can do to make sure you don’t pay more than you have to.
Don’t limit your options
We get that mortgages are not interesting or sexy. But that should not mean that you just tick the box for a product transfer when the time comes.
It’s definitely worth considering some alternative options.
An independent mortgage broker will help you to look for the best remortgage deal available from nearly 100 lenders (not just one). At the same time you can adjust the amount of your mortgage, the term and even the repayment method.
Shucks, it also allows you to remove someone from the mortgage at the same time! Bargain 😉
Let us put you in touch with a remortgage expert. They will talk over your options and then see if anything better is available.
