Product Transfer Mortgage
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Product Transfer Mortgage
What is a product transfer and how does it work?
The key difference between a remortgage and a product transfer is whether you change lenders. If you have an existing mortgage and you’re coming towards the end of a fixed rate, you could choose to stay with your existing lender for another product. That would be a product transfer.
But perhaps another lender had a better rate and persuaded you to move to them. Moving your mortgage from one lender to another is effectively a remortgage.
Is it better to stay with your existing lender?
It’s definitely simpler to stay with your existing lender. However, depending on your requirements, switching to a new lender may bring significant benefits.
It could mean a better rate, more flexibility, lower early repayment charges or lower fees.
Many different aspects could make a deal worth changing. Each individual person’s situation is different with a mortgage, and just accepting a product transfer isn’t always the right solution.
Discussing your plans and future requirements with a professional can help in finding a product that’s more suitable for the future. Whether that’s a remortgage or a product transfer just depends on the different options.
When would I need a product transfer?
A product transfer is generally offered by your existing lender in the last six months of your scheme term. If you’ve got six months left of a fixed rate or a tracker rate deal, that’s when they’ll get in contact with you.
Depending on the lender, a product transfer deal could be available between six and three months before the existing product ends.
Can I do a product transfer early?
Not usually. You could remortgage early to another lender, but you may end up with early repayment charges with your existing lender.
If you’re considering moving before your product ends, speak with a broker and weigh up the options, consequences and costs – that’s an invaluable thing to do.
How long does a product transfer take?
The transfer process isn’t lengthy at all. It can generally be completed in a very short timescale.
I should point out, though, that lenders’ rates can change. Let’s say you’ve accepted a rate three months in advance of your product ending, and then the Bank of England reduces the base rate. Your lender has just cut their rates – and as part of the process you don’t have to stick with the initial product transfer. You can switch it to a cheaper product.
But if the initial product you’ve chosen remains the most competitive – even if interest rates go up – you’ve locked in that deal, which is great news.
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How much does a product transfer cost?
Generally, most lenders offer a couple of options with product transfers. There are products without any fees – no arrangement fee, no valuation fee, etc. But also they tend to offer a secondary product with perhaps a lower interest rate and an arrangement fee on top. Typically, there still won’t be valuation or conveyancing fees involved.
The arrangement fee, if charged, would be around £1,000 – most people tend to add this to the mortgage. Whether they should or not is a different matter. A broker will help people navigate the best options and give advice on whether it’s best to pay that fee or not.
Do I need a credit check for a product transfer?
Everybody gets hung up about their credit scores nowadays, and the good news is that with product transfers, lenders won’t conduct a credit check.
If you’re staying with your existing lender, they’ve already got the risk, so there are no ongoing checks.
Can I cancel a product transfer?
Generally, yes, product transfers can be cancelled to facilitate a switch to a better rate, for example. Perhaps a better deal has come up with another lender and you decided to remortgage to that – the product transfer can be cancelled.
It’s important to consider lenders’ timescales, and as you near your required completion date, the less flexibility there will be regarding cancelling or switching the product.
Typically, if it’s within the last two or three weeks, it will be more difficult or you may have already locked yourself in. Prior to that stage, there tends to be a good degree of flexibility.
You’ve demonstrated how a mortgage broker can help with a product transfer – have you got anything else to add?
A broker provides a valuable service when approaching the end of a mortgage scheme. Far too often, people take the easy option and switch their product directly with the lender. But it isn’t necessarily always the right thing to do.
We’ve had clients come to us after taking a product transfer, wanting to make changes. We find they’re locked in for a five-year term with heavy early repayment charges… as they hadn’t considered changing things before.
It’s always good to get a second opinion and talk about your plans for the future. Then, the advice you’re given will always give you the best route forward, whether that’s a remortgage or a product transfer. A broker can help not only with product transfers, but also access to the open market, comparing products, pricing, terms and conditions.
We provide advice based on your requirements both now and in the future. It’s about providing a service where you can bounce ideas around to make sure you get the right solution.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
