Securing your dream home is a huge milestone, but your mortgage journey doesn’t end the day you step through the front door. While it may be tempting to set aside any thoughts about your mortgage deal, staying informed can help you make smarter financial decisions in the long run.
One important option to consider is a product transfer, which allows you to switch to a new mortgage deal with your current lender. Far from being a complicated process, this can offer substantial benefits, including better rates and financial savings.
However, before deciding whether a product transfer is right for you, it’s vital to understand how it works and what factors to note. It’s for this reason why we’ve put together this guide, to give you all the essential details and help you navigate your next steps with confidence.
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What is a Product Transfer Mortgage?
A mortgage product transfer is a type of remortgage that allows you to switch to a new deal with your existing lender rather than moving to a different provider.
Many homeowners consider a product transfer when their current mortgage deal is nearing its end. If no action is taken, then the loan will revert to the lender’s standard variable rate (SVR), which often comes with higher monthly repayments.
By securing a better deal before this happens, you’re likely to save money and keep your mortgage payments more manageable. Most lenders allow you to arrange a new deal 3 to 6 months in advance, giving you time to lock in a competitive rate before your current term expires.
How do Product Transfer Mortgages Work?
If you meet the eligibility criteria and aren’t looking to borrow additional funds, the process of a product transfer is typically straightforward.
In many cases, homeowners can secure a new deal with their existing lender in just a few days. Since there’s no need for a property valuation or extensive affordability checks, the transfer can often be completed with minimal hassle. This makes it an attractive option for those seeking a smoother, quicker way to adjust their mortgage terms without switching providers.
Why Choose a Product Transfer Mortgage Over Switching Lenders?
Opting for a product transfer instead of moving to a new lender can offer several advantages. Here’s why staying with your current lender might be the smarter choice:
- No Credit Checks: Unlike switching lenders, a product transfer usually doesn’t require a new credit assessment, making it ideal if your financial situation has changed.
- Minimal Paperwork: The process is streamlined, reducing the amount of documentation you need to complete.
- No Full Valuation Required: Most product transfers don’t involve a full property valuation, which speeds up the process.
- No Early Repayment Charges: Staying with your current lender means avoiding costly exit fees that can come with switching providers.
- Lower Legal Costs:There’s little to no legal work involved, meaning you can bypass solicitor fees and extra charges.
What are the Drawbacks of a Product Transfer Compared to Remortgaging?
While a product transfer can be a convenient option, it’s significant to consider the potential disadvantages before committing. Here are some key factors to keep in mind:
- Limited Choice: Sticking with your current lender means you’re restricted to their product range, possibly missing out on more competitive deals elsewhere.
- Less Competitive Rates: Without comparing offers from other lenders, you might not secure the best mortgage rate available on the market.
- Lender Bias: Your current lender won’t highlight better remortgaging options from competitors, meaning you may not be getting the most cost-effective solution.
- Risk of Rejection: If your circumstances have changed, such as a reduced income or credit score, your lender could decline your transfer request, leaving you with fewer alternatives.
- Potential Costs if Declined: Being turned down for a product transfer without a backup plan could result in being placed on your lender’s SVR, leading to higher repayments.
Can I Borrow More When Transferring my Mortgage?
Yes, it is possible to borrow additional funds during a mortgage product transfer through what’s known as a further advance. This allows you to take out extra borrowing against your property, which many homeowners use to fund home improvements, thereby increasing their property’s value.
How Will My Affordability Be Tested If I Want to Borrow More?
Obtaining a further advance isn’t as simple as a standard product transfer, as your lender will need to assess your financial situation in greater detail. Your lender will evaluate several factors before approving additional borrowing, including:
- Your Financial Situation: Changes in your income or employment status may impact your eligibility.
- Equity in Your Home: The amount of equity you hold in your property will influence how much extra you can borrow.
- Credit History: A strong credit profile improves your chances of approval, while a weaker score could make borrowing more difficult.
- Mortgage Repayment Track Record: Lenders will review your payment history to ensure you’ve been keeping up with your current mortgage commitments.
Should I Get a Product Transfer or Remortgage?
Deciding between a mortgage product transfer and a remortgage with a new lender depends entirely on your personal financial situation and long-term goals. To make an informed choice, it’s important to weigh up your options carefully and seek professional guidance where needed.
With our intuitive online platform, you can effortlessly compare a vast selection of remortgage deals tailored to the UK market. Updated daily, it provides access to thousands of competitive offers, ensuring you stay informed about the best rates available.
Once you’ve identified a deal that suits your needs, our team of expert advisors is on hand to offer personalised support. We take the time to understand your financial circumstances and goals, guiding you towards the most suitable option – whether that’s a simple product transfer or a full remortgage.
If you’re unsure which route to take or have any concerns, don’t hesitate to reach out. Our goal is to simplify the process, eliminate confusion, and help you secure a mortgage deal that aligns with your financial future.