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Product Transfer Mortgage

Lee from Mortgages by McAteer joins the Mortgage & Protection Podcast to explain mortgage product transfers.  

What is a product transfer mortgage?

A product transfer is an alternative to remortgaging, where you switch your mortgage deal but stay with your existing lender. When you come into the end of a fixed rate or tracker rate with your existing lender, you should have a look at the other mortgage options – otherwise you will be put on the standard variable rate, which is an expensive way to borrow. 

A product transfer and a rate switch are the same thing – you’re switching your product with your existing lender rather than going to a new one.

What’s the difference between a product transfer and remortgaging?

With a product transfer you’re switching to a new product with your existing lender. In a remortgage you are changing your mortgage to a new lender. That’s the main difference between the two.

Is there any difference between going to a Mortgage Broker and a High Street bank to switch?

The difference between brokers and high street lenders, is that with a broker you’ve got access to a whole range of lenders, not just the products of that individual bank. You’d have to go up the whole high street and beyond to look at all the different deals that might be available. 

There are also ‘intermediary only’ lenders that you can’t access on the high street. When you’re looking to do a product transfer, brokers can get exclusive deals or cheaper broker-only deals. Because they deal with the lenders on a daily basis, lenders give brokers special deals to help them retain clients. On the flip side, there are some branch exclusives. So it’s good to explore both to see what is the right deal for you. 

When might it be best to do a product transfer? 

There’s a range of reasons to do a product transfer rather than a remortgage, especially if you’ve had a change in circumstances. If you’re newly Self-Employed or you’ve had a drop in income, you might not pass the affordability criteria and checks with a new lender. 

Also, if time is an issue and you just want to switch fast, a product transfer can help. But remortgaging can potentially save you money because you’re looking at a lot more options with different lenders.

It’s definitely worth looking at both options to make an informed decision about what is right for you.

How long does a product transfer take? 

Generally, you can transfer your products three or four months before the expiry of your existing deal. So depending on the lender, if the rate is cheaper, they will allow you to switch the product early. It can be done within a week, sometimes even the same day. 

But it really does depend on the lender at that point in time, and we can obviously help and advise you.

What is the process for a product transfer and what documents do you need? 

We’d need your existing mortgage account number to pull up your information. That would allow us to have a look at what products are available with your existing lender. Depending on when you bought the property, it may have increased in value. Some lenders use an automated valuation, while others use the value when you initially purchased the property. 

It’s good to have a look at it as early as possible to see if a product transfer is right for you.

Then, if you do want to proceed, you will need ID documents to verify your details. For a product transfer, no payslips or bank statements need to be sent to lenders because they already know you and your payment record.

What are the advantages and disadvantages of a product transfer? 

The main advantages are speed and ease. It is very easy to change your product with your existing lender. You don’t have to deal with a solicitor – when you’re remortgaging, you need a solicitor to register the property on behalf of the lender. There are no affordability checks or formal evaluation of the property. 

The main disadvantage is that you’re just looking at one lender and it may not be the best deal. But a broker can give you a sense of how competitive your lender’s products currently are.

What are the rates and fees for product transfers?

The rates depend on how much equity you’ve got in your property. If the lender deems that your house price has gone up, you’ve then got more equity in your house – and they can offer you a more favourable deal. It all depends on what your situation is at that point in time. 

In terms of fees, lenders sometimes offer a cheaper rate with maybe a product fee, often £499 or £995 – while some of them have no fee. It’s all dependent on the lender’s criteria and your situation.

Whether the fee is worth it will depend on your loan amount. If you’ve got a relatively low loan amount but the fee will add £1000 onto your mortgage, that may not be the right option. For a higher loan amount, where you’ll save more than the fee because of a lower interest rate, it will usually be worth doing.

Is it better to stay with your existing lender? 

That’s a tough one. Recently, lenders have introduced better offers on product transfers. But we still find that switching to a new lender can usually save you more money. It’s just down to individual circumstances and exploring both options. 

Your mortgage is generally the biggest debt that you have. So making minor savings can save you a lot over the term of the mortgage.

Is there a credit check involved in a product transfer?

There’s no credit check with the lenders for a transfer. As long as you’re up to date with payments, that will allow you to do the product transfer.