Mortgage product transfers

Mortgage Product Transfers guide – How they work and what to do next

If you want to remortgage your home, you may consider a mortgage product transfer. This is when you transfer your mortgage to a different deal with your existing lender.

A mortgage product transfer is a lesser-known form of remortgaging a property but does have some advantages over moving your current mortgage to a new mortgage provider, as is standard with a normal remortgaging process.

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What Is a Product Transfer Mortgage?

In very basic terms, a product transfer mortgage is a process of remortgaging your home with your existing lender rather than remortgaging with a new financial provider. You’ll move your mortgage to a new deal with your existing mortgage lender to have better interest rates and potentially new terms if desired.

A product transfer can be faster than a remortgage, as there is no need for a credit check or a full property evaluation, provided the borrowed amount remains the same.

A further advance product transfer is a slightly different option, where the borrower wishes to increase the size of their mortgage. This works slightly differently from your standard product transfer process and will require more assessments and red tape.

Mortgage product transfers are quicker when you’re looking to remortgage, but one shouldn’t rush into them. It is advisable to check that there are no other, better options available through other lenders. Speaking to a remortgage adviser before making any changes is a good idea.

How Does a Product Transfer Mortgage Work?

Typically a product transfer will occur at the end of a fixed term. It involves moving your mortgage to a better deal with the same lender.

A fixed term is when your interest rate is fixed for a certain length of time. Once this term is over, the rate will likely increase to whatever the lender’s Standard Variable Rate is. This is often higher than the rate you were paying during the fixed term. This is why people opt to do a product transfer or to remortgage.

The product transfer process is quite quick and easy and doesn’t require additional credit checks or property valuations, provided you’re not increasing the amount you’re borrowing. It is a simple product switch.

This makes it possible for those who have lost their jobs permanently or temporarily to change their product without being subject to affordability assessments.

Product Transfer Mortgages vs Remortgaging

Remortgaging and product transfer mortgages aren’t hugely different. The only big difference is that a product transfer mortgage is with your existing mortgage lender, whereas you move to a new mortgage lender with a remortgage.

Remortgaging is used as an umbrella term for refinancing your home, whether it is through your current lender or a new one. However, product transfers are the lesser-known and lesser-used option of the two, so it is generally assumed that a remortgage process is happening with a new provider.

The process for remortgaging takes longer than the process for a product transfer, as the new financier will need to do a number of checks before going ahead with the deal. Borrowing more money can also increase the time that either process will take.

While the speed of a product transfer is appealing, it has several downsides. One of the main ones is that it is very limiting. When opting to stay with your current mortgage lender, you will only have access to a few deals, and they may not be as lucrative as those offered by other companies.

We’ve outlined some of the advantages and disadvantages of a product transfer in more detail below.

Advantages of Product Transfers

• There is less paperwork for both the lender and borrower.
• Unless a loan increase is being requested, a property valuation can be avoided.
• Often borrowers are not liable for any additional legal fees.
• A product transfer is fast and can be completed in approximately ten days.
• There is often no need for an affordability check.
• Fewer fees than a remortgage process, or none at all.
• A viable option for borrowers who needed a payment holiday or lost their jobs.

Disadvantages of Product Transfers

• Your options are limited when it comes to deals.
• You might not be getting the best possible option, as you’re only looking at one lender.
• Your lender is likely to be biased and won’t offer the same advice as a remortgage advisor.
• If your circumstances have changed, getting approval for an increase may be more difficult.
• If your remortgage is declined, you won’t have a broker or mortgage advisor to fall back on.
• You’re unlikely to get the best possible rates, as these are often only given to new clients.
• There is a possibility of hidden fees.
• You are unable to change the mortgage members – if you have gotten married or divorced, you cannot add or remove your spouse.
• It can only be utilised for standard home mortgages.

The Application Process

Are you eligible for product transfers?

With product transfers, you’re remaining with your existing lender, which means that you’ll likely not be subject to many (or any) checks before approving a product switch.

If you have been a consistent payer, you have a standard residential mortgage, you have full-time, permanent employment, and will be less than 70 years of age upon loan expiry, you’re eligible to switch your product.

Some extra checks will likely be done if you want to transfer a non-standard mortgage product or increase your loan from your existing lender.

These eligibility checks will, unfortunately, prolong the process, but it will still be a faster option than choosing to remortgage with a new financier.

Mortgages considered non-standard are those for older or self-employed borrowers, buy-to-let mortgages and mortgages on properties with equity in the red.

What can one expect with an affordability check?

An affordability check requires you to give evidence of your employment and finances. The required documentation varies from lender to lender – some will have a list of specific documents, while others will accept almost any evidence of income and expenses.

Consulting a broker when applying for a remortgage or product transfer is recommended, as they will be able to advise you on which option is best for you.

Is a deposit required?

A deposit is not required when you’re switching products, but you will need to show evidence that your property holds the required amount of equity for the financier’s loan-to-value needs. In most instances, this is 10% of the value, but it is possible to find lenders who will accept a lower amount.

What Is Better: Switching Or A Product Transfer?

While it may seem easier to go ahead with a product transfer mortgage, it is highly recommended to investigate other mortgage products available from other lenders before going ahead with your decision.

Your current lender may be able to offer you a rate that is better than their standard variable rate (SVR), but it is unlikely that it will be as good an offer as a fixed rate offer from a different lender.

Often, the deals available on the mortgage market are better than those available within your lender’s product range. Meeting with a mortgage advisor to discuss switching lenders and investigate your alternative mortgage options is advisable. You are also less likely to find a fixed-rate deal with your current lender.

Consulting with a mortgage broker has the added benefit of getting impartial advice regarding the various mortgage deals available from an industry expert. They aren’t affiliated with any particular company, so they have no reason to sell you a product that is not the best deal for your particular needs.

If your remortgage request is declined, you’ll have a safety net in place. Your mortgage broker will be able to give you other mortgage options and advise you on which mortgage provider can offer you the best alternatives.

Sometimes our circumstances change, and these changes are beyond our control. Unfortunately, this can result in losing access to a mortgage or not meeting the requirements for various remortgage options. In this scenario, a mortgage advisor will be able to help you to find a lender offering a mortgage fitting your criteria.

In summary, speaking with a mortgage expert is the best option, as they will be able to analyse your situation and advise you on whether moving to a new lender is the best option for you or if you should remain with your current lender.

Consulting with specialist brokers is highly recommended if you want to save money, explore the best deals available and ensure you’re making the correct decision for your situation.

FAQs

Is remortgage the same as product transfer?

All product transfer mortgages are remortgages, but not all remortgages are product transfers. A product transfer is when you switch to a new mortgage deal with the same lender as your original mortgage. It is a quicker process, but you may not get the best deal possible, as most lenders often won’t give fixed rates to existing customers.

When you choose to remortgage your home with a different lender, you’ll be subject to a new property valuation, which makes the process involved more time-consuming than that with a product transfer. However, you will likely be able to find a deal with a better interest rate or at least a rate that is equal to the one you had with your original mortgage.

What is a product transfer?

This lesser-known form of a remortgage involves transferring products while remaining with the same lender. This option is great for those who have had changes in circumstances, as it doesn’t require a full valuation unless you’re applying for additional borrowing.

Often a product transfer will take place at the end of a fixed mortgage term, to secure a lower interest rate than the lender’s SVR.

Is there a credit check for product transfer?

In most instances, there is no credit check with a product transfer, as you are staying with your existing lender. The only time that you’ll need a credit check is if you wish to increase the loan amount, or if you are going to be over the age of 70 when the mortgage period ends.

Final Thoughts on mortgage product transfers

A product transfer can be a great remortgaging option, depending on your circumstances. It is recommended to consult with a mortgage broker whether or not your circumstances have changed, as they will be able to offer the best and most reliable advice regarding which option is best for you.

A remortgage expert will also be able to give you a wider range of deals to choose from, and will likely be able to find something that is better suited to your situation than that suggested by your current lender.

However, if you’re needing to organise a remortgage quickly, or want to avoid additional paperwork, a product transfer is a good option to consider.

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