Remortgage or Product Transfers?

If your mortgage is due for change in the months of May, June, July or August this year then you would be well advised to look at this now; it could just save you a lot of money in this difficult times.

Below are some typical questions and answers we get and give.

My adviser said I should just Product Transfer my mortgage, my friend said I should remortgage. What is the difference?

A full remortgage is applying to get your mortgage transferred to a new lender to take advantage of new rate, terms or criteria and perhaps borrow some more money too, typically for some home improvement or for a deposit on new buy to let property.

A product transfer is simply getting your existing lender to put you on a new deal that they are offering from their range, usually when your existing is coming to an end. This is most likely to be to avoid slipping on to a higher rate with that lender, often called their standard variable rate.

When would you advise I do one over the other?

It is a mortgage adviser’s role to make sure their customers get the best possible advice depending on individual customer needs and circumstance.

The advantage of the product transfer is that they are quick to arrange, no valuation or income checks are normally needed, and no legal work is required.

It is the adviser’s role to make sure and document that the new deal is affordable to the customer.

The real advantage to the customer is that it is normally a quick easy to do straightforward transaction.

Sometimes though, reduced rates or improved criteria might mean that a remortgage to a new lender is most suitable. It all depends on the individual circumstances.

Surely I should be doing the Product Transfer every time?

Well no, because it may be that your existing lender can only offer you a deal that is much higher in price or monthly cost than an entirely different lender

Here, a move would be worthwhile but only if your personal set of circumstances such as income and credit worthiness matched your intended new lender’s criteria. That is where a good mortgage adviser is invaluable.

Examples of Product Transfers and Remortgages

Scenario 1

Mr and Mrs A are currently both working from home, flat out and trying to home school 3 children.

Their current mortgage deal ends 30th May (1 month from now) and they do not have the time to get a new remortgage completed or the inclination to do the paperwork and deal with the conveyancing lawyers.

Staying with the existing lender could cost them £9 extra a month but the new lender’s cheaper deal might not complete for 6 weeks, which would add further costs.

All this information has been made very clear to them and they want to stay with their existing lender on a new deal that still saves them £210 a month compared to their current rate.

Scenario 2

Mr and Mrs B have a very large mortgage where their deal and rate will expire on the 30th September (5 months away).

They have asked me to find the very best deal on the market for them.

Let us say there is a total monthly saving of £23 a month moving to a new lender over a 5-year fixed term. Providing they will get accepted, there is a potential £1,380 saving here over the 5 years so this is worth exploring carefully.

Because they have more time to complete on the new mortgage, it is likely to be worth switching to a new lender in this circumstance.

In summary

The key to the question ‘remortgage or product transfer’ is quite simply, everyone’s circumstances are different and it is up to a good mortgage adviser to offer the very best solution at the time.

Let us conclude by saying if your mortgage product is nearing its end, please do seek help and advice.

The alternative is for your mortgage to be put onto the lenders standard variable rate which could mean a substantial increase in your monthly repayments.