Mortgage product transfers are an essential aspect of managing your mortgage effectively. This guide aims to provide a comprehensive understanding of what a product transfer is, how it works, and the considerations you should make before deciding to transfer your mortgage.
What is a Mortgage Product Transfer?
A product transfer mortgage, often referred to as a rate switch or product switch, is a process where you change your current mortgage deal with your current mortgage lender to a new deal offered by your lender. This is distinctly different from a remortgage, which involves moving your mortgage to a new lender.
Key Characteristics of Product Transfers
- Same Lender: The most significant aspect of a product transfer is that it occurs with your existing mortgage lender. There’s no need to switch to a different mortgage lender.
- Change in Terms: It typically involves altering the terms of your current mortgage. This could mean switching from the lender’s standard variable rate to a fixed rate, changing the mortgage term, or adjusting the interest rate.
- Simplicity and Speed: One of the primary advantages of a product transfer is its simplicity and speed compared to a full remortgage. Since you’re staying with your existing mortgage lender, the process usually requires less paperwork and can be completed more quickly.
- No Additional Borrowing: Generally, product transfers do not involve additional borrowing. They are primarily about changing the terms of your existing loan amount.
When is a Product Transfer Beneficial?
- End of Initial Deal: It’s a common choice at the end of an initial mortgage deal, such as the end of a fixed-rate period, where reverting to the lender’s standard variable rate (SVR) would increase your payments.
- Avoiding Fees and Additional Checks: If you’re satisfied with your current mortgage lender but want to avoid the higher SVR, a product transfer can be a good option. It often avoids the fees, additional credit checks, and property valuations that come with remortgaging to a new lender.
- Change in Circumstances: If your circumstances have changed and you’re not looking to borrow more money, a product transfer can adjust your mortgage to better suit your current situation.
Considerations Before Opting for a Product Transfer
- Limited Options: You are limited to the products offered by your existing mortgage lender. They might not be offering you the lowest interest rate and best deal on the mortgage market as there are over 14,000 to choose from.
- Financial Position: If your financial position has improved significantly, you might find more favourable terms with a new lender. Talk to a mortgage broker!
- Long-Term Financial Goals: Consider how the new terms align with your long-term financial goals. Sometimes, what seems like a small difference in interest rates can have a significant impact on the life of the mortgage.
How do Product Transfer Mortgages Work?
Product transfer mortgages involve a series of steps and considerations that differ significantly from the process of remortgaging with a different mortgage lender. One key question homeowners often face is whether their current lender can offer a better deal than a new one. Understanding the process of how product transfers work can help you navigate this decision more effectively and determine if staying with your existing lender is the best choice for you. You can apply for a new mortgage interest rate through a mortgage broker who will often have quicker turnaround times.
The Process of a Product Transfer
The process of product transfers is streamlined and straightforward, designed to facilitate an easy transition within your current mortgage lender’s offerings. It’s a practical approach for those looking to modify their mortgage without the complexities of switching lenders.
Initiating a Product Transfer
- Contact Your Lender: The first step is to get in touch with your current mortgage lender. This can usually be done online, over the phone, or by visiting a branch.
- Review Available Deals: Your mortgage lender will present you with the mortgage deals available for transfer. These deals are typically exclusive to existing customers and may not be available on the open market. Your lender will carry out a desktop property valuation which could work to your advantage.
- Assess Eligibility: Your mortgage lender will check if you’re eligible for a product transfer. This usually involves a simpler assessment compared to applying for a mortgage with a new lender.
Documentation and Approval
- Minimal Paperwork: One of the advantages of a product transfer mortgage is the reduced paperwork. Since you’re already a customer, the lender has most of your information.
- Credit Check: Some lenders might perform a soft credit check, but this is generally less rigorous than the checks for a new mortgage.
- Approval Process: If you meet the criteria, the lender will approve the product transfer. This process is typically quicker than a full mortgage application.
Getting A New Mortgage Deal: Understanding Your Options
When considering a product transfer mortgage, it’s crucial to thoroughly understand the different mortgage options your current lender offers. This understanding will help you make an informed decision that aligns with your financial goals and current circumstances.
Comparing Mortgage Types
- Fixed-Rate Mortgages: These offer the security of a fixed interest rate for a set period. They’re ideal if you prefer predictable monthly payments.
- Variable-Rate Mortgages: These include tracker and standard variable rate (SVR) mortgages. They can offer lower rates initially but come with the risk of rate increases.
Assessing The Terms Of Your New Mortgage Deal Vs Your Current Mortgage Deal
- Interest Rates: Compare the interest rates of the new deal with your current rate and those available in the wider market.
- Mortgage Term: Consider if the new fixed or tracker deal changes the length of your mortgage term and how this affects your long-term financial plans.
- Monthly Repayments: Calculate how your monthly payments will change and whether this fits your budget.
Considering Charges and Fees
- Early Repayment Charges (ERCs): Check if there are any ERCs on your current deal and whether they apply if you switch to a new product with the same lender.
- Exit Fees: While product transfers typically have lower fees than remortgaging, it’s important to be aware of any exit fees or administrative costs.
Should I Stay with The Same Lender or Should I Switch?
Before proceeding with a product transfer mortgage, it’s crucial to evaluate all these factors. Compare the proposed terms with your current mortgage and consider whether the transfer aligns with your financial goals. While product transfers offer convenience and simplicity, they may not always provide the most financially advantageous terms compared to the wider market.
If your financial situation has worsened, a product transfer with your existing lender might be the best option due to its simplicity and potential for a fixed-rate deal. However, if you’ve built up significant home equity, switching to a new lender could offer a more competitive deal and lower monthly payments. A mortgage broker can provide tailored advice and compare deals across the market to ensure you make the best decision.
- To help you answer the question further read our guide on Remortgage Same Lender: A Comprehensive Decision-Making Guide
Reasons to Transfer Your Mortgage Product Rather Than Switch Lenders
Choosing between a product transfer mortgage and switching to a new mortgage lender involves several considerations. Here are key reasons why a product transfer might be more advantageous than switching to a different lender.
Familiarity and Convenience
- Existing Relationship: Staying with your current mortgage lender leverages the relationship you’ve already built. This familiarity can make the process smoother and more straightforward.
- Simplified Process: A product transfer typically involves less paperwork and a quicker completion time compared to a full remortgage with a new alternative lender.
Financial Implications
- Cost-Effective: Transferring your mortgage product with the same lender often incurs lower fees than switching to a different mortgage provider. This includes potentially avoiding valuation fees, application fees, and legal costs.
- No Additional Borrowing: If you’re not looking to increase your mortgage amount, a product transfer can be a more suitable option.
Will My Current Lender Be Able to Offer Me a Better Deal Than a New One?
When considering a product transfer, a key question to address is: Will my current lender be able to offer me a better deal than a new one? To answer this, it’s essential to understand and compare the different mortgage options your existing lender offers against potential offers from new lenders. This comparison will help you make an informed decision that aligns with your financial goals and current circumstances.
- Competitive Rates: Sometimes, your current lender might offer competitive or even exclusive deals to current customers, which might not be available in the broader market.
- Rate Comparison: It’s crucial to compare the interest rates and terms offered by your existing lender with those available from other lenders. Consider both the short-term benefits and long-term impacts on your mortgage.
- Personalised Offers: Your lender might provide offers tailored to your current financial situation, especially if there have been significant changes since you first took out your mortgage.
Other Considerations
- Credit Status: If your credit status has changed since you first took out your mortgage, staying with your current lender might be more advantageous, as they might be more lenient with existing customers.
- Market Fluctuations: The mortgage market is subject to fluctuations. Sometimes, the stability of a known lender and the predictability of their offers can be more reassuring than venturing into new deals in a volatile market.
- Property valuation: If you have carried out extensive modernisation and improvements to your property this will not be reflected in the valuation your lender used when you bought the property and may need a new property valuation.
Advantages and Disadvantages of Product Transfers
Understanding the advantages and disadvantages of product transfers is crucial in determining whether it’s the right choice for your mortgage needs. This comparison helps you weigh the benefits of staying with your current lender against the potential opportunities available with a new one.
Benefits of Transferring Your Mortgage
Product transfers offer several advantages:
- Simplified Process: Less paperwork and quicker completion times.
- Familiarity with Lender: Continued relationship with your existing lender.
- Potential Cost Savings: Avoidance of certain fees associated with remortgaging.
Potential Drawbacks
However, there are also drawbacks:
- Limited Choices: Restricted to deals offered by your current lender.
- Missed Opportunities: Potential better rates available in the broader market.
Product Transfer vs Remortgage
With a product transfer, you’re restricted to your current lender’s product range, whereas remortgaging to another lender could give you access to potentially better deals.
A product transfer mortgage is essentially the same as a remortgage as you are switching to a different mortgage rate and deal. However, you are restricted to your current lender’s product range if you decide on a product transfer whereas remortgaging to another lender could give you access to a potentially better deal.
Product Transfer
With a product transfer, you’re essentially switching to a different mortgage product within your current lender’s range. Here are some key points to consider:
- Simplicity: The process is typically straightforward and involves less paperwork than remortgaging.
- No Credit Checks: As you’re staying with your current lender, there’s usually no need for a new credit check.
- Speed: Product transfers can often be completed quickly, sometimes within a few days.
- Limited Options: You’re restricted to your current lender’s product range, which may not include the best deal available in the market.
Remortgage
Remortgaging involves switching your mortgage to a new lender. Here are some factors to consider:
- Access to Better Deals: Remortgaging can potentially give you access to better deals than your current lender can offer.
- Potential for More Borrowing: If you need to borrow more money, remortgaging can provide this flexibility.
- Longer Process: The remortgaging process can be longer and more complex than a product transfer.
- Credit Checks: Remortgaging will involve a credit check and potentially other checks by the new lender.
In both cases, it’s important to consider your personal circumstances, and the current mortgage market, and seek advice from a mortgage broker or financial advisor.
Can I Borrow More When I Transfer My Mortgage?
When you opt for a product transfer, you might wonder if it’s possible to increase your borrowing amount. This typically involves a financial assessment by your lender to determine your ability to manage additional debt. The assessment takes into account various factors, including your current financial status and the lender’s borrowing criteria.
You may wish to raise more money to consolidate debt. This may be possible with product transfer mortgages however each mortgage lender has a different stance on raising extra funds therefore it would be advisable to talk with a mortgage broker as this might involve a further advance.
Assessing Additional Borrowing
- Credit Check: A credit check is often conducted to evaluate your creditworthiness, especially when you’re looking to borrow more.
- Income Verification: Proof of income is required to ensure that the new, potentially higher mortgage payments are manageable for you.
Mortgage Transfer Options
- Loan-to-Value Ratio: The additional amount you can borrow is influenced by the loan-to-value ratio of your property.
- Interest Rates: Different interest rates may apply to the extra amount borrowed, which can affect your overall repayment plan.
How Will My Affordability Be Tested If I Want to Borrow More?
Your lender will conduct a thorough financial assessment to determine if you can comfortably manage the increased monthly mortgage repayments. This assessment is a critical step in ensuring that the additional borrowing won’t put undue financial strain on you.
Key Factors in Affordability Testing:
- Debt-to-Income Ratio: This important metric helps lenders understand how your existing debts compare to your income.
- Current Financial Commitments: All your financial obligations are taken into account to ensure that the new loan is sustainable.
- Interest Rate Changes: The assessment also considers potential fluctuations in interest rates and their impact on your repayment ability.
In considering additional borrowing during a product transfer, it’s essential to understand the lender’s criteria, undergo a thorough financial assessment, and be aware of the impact on your overall financial health. Making an informed decision with professional guidance ensures that your mortgage continues to align with your financial goals and capabilities.
Case Study: Jane's Mortgage Product Transfer Experience
Grant a mortgage adviser at YesCanDo Money evaluated Jane's financial situation, property valuation, and how much equity Jane had in her current property. They compared her existing lender's mortgage products with what was being offered by other lenders and recommended a mortgage product transfer as the best option.
Choosing a product transfer, Jane secured a lower interest rate and reduced her monthly mortgage repayments, avoiding extensive credit checks or affordability assessments. The process was quick, straightforward, and cost-effective. Jane's experience highlights the importance of sound mortgage advice in finding the most suitable mortgage option.
Mortgage Lenders Product Transfer Criteria
Mortgage lenders impose strict product transfer requirements when considering switching from their current deal with them to one with their newer one, including credit checks, affordability assessments and any circumstances under which a transfer may be denied.
You will usually be eligible for a mortgage product transfer if…
- There are no arrears on your current loan
- You are in full-time employment
- You will be under 70 when the new loan expires
If you have a standard residential mortgage, lenders typically won’t require extra checks from you. But if yours is non-standard – such as for self-employed borrowers or older borrowers or buy-to-let property owners – additional procedures such as affordability assessments could apply.
| Bank | Product Transfer Details |
|---|---|
| Barclays (Woolwich) | Open to existing Barclays Woolwich residential mortgage clients. Must be up-to-date with payments and not have a history of arrears. Applicable for clients close to their product end date or on the standard variable rate. |
| HSBC | For existing customers, HSBC offers online mortgage rate transfers for those registered in online banking. The new mortgage must be completed within six months after the existing mortgage is repaid. More than three months should remain on the current rate deal. |
| Lloyds Bank | Clients with a mortgage account number starting with 70 can apply for a new rate via the Product Transfer service. Must be an existing Lloyds Bank mortgage customer with no arrears. |
| Nationwide | Rate switch requests can be made online if the client is on a Nationwide Base Mortgage Rate, Standard Mortgage Rate, a tracker product without early repayment charge, or within six months of their product expiring. |
| NatWest | Offers a service for transferring to a new residential mortgage or Buy-to-Let mortgage deal within their product range. |
| Royal Bank of Scotland | Offers rate switching to prevent moving onto the standard SVR, which could save money on monthly payments. |
| Santander | Provides a product transfer service for existing customers seeking a new residential mortgage or Buy to Let mortgage deal, allowing transfers within their product range. |
| Standard Chartered | Allows mortgage balance transfers with competitive terms and a possible cash-out depending on property value. |
| TSB Bank | Available to existing mortgage customers, including Shared Equity & Shared Ownership, for switching to a fixed or tracker rate. Offers transfers up to 120% loan-to-value with a maximum loan size of £7.5 million. |
| Halifax | Permits product transfers either before or after the current deal expires. |
| TSB/Lloyds | Transfers are available, but not through online means. |
| Accord | Allows transfers only when the current deal has concluded. |
| Birmingham Midshires | Offers product transfers without any fees. |
| Aldermore | Transfers do not require new credit or affordability checks. |
| Yorkshire Building Society | Allows customers to reserve a new fixed-rate deal for up to 120 days. |
FAQs
What is product transfer?
A product transfer is when you switch your current mortgage to a new deal with the same lender.
What is a mortgage switch?
A mortgage switch, also known as a product transfer, is when you change your current mortgage to a new fixed rate or tracker deal with the same lender.
Is a product transfer easy?
Yes, a product transfer is often quicker and easier than switching mortgage lenders.
How long does a product transfer take?
A product transfer can be completed within a week if it’s a straightforward switch.
What is the difference between a product switch and a remortgage?
A product switch or transfer is when you change mortgage deals with your present lender. A remortgage is when you change your mortgage to a different lender.
Do you need a solicitor for a mortgage product transfer?
No, you can remortgage with the same lender, known as a product transfer, without using a solicitor.
Is there a credit check on a product transfer mortgage?
Not always. Some lenders forgo credit checks on a straightforward product transfer.
Can you borrow more on a product transfer?
Yes, you can apply to borrow more during a product transfer.
Can a lender refuse a product transfer?
While most lenders are comfortable with product transfers, they may refuse if there are significant changes to your circumstances.
What checks are done on a product transfer?
Typically, lenders check if you’ve been keeping up with your monthly mortgage repayments. Some lenders also waive affordability and credit checks on trusted customers who request product transfers.
How long does a mortgage product transfer take?
A product transfer mortgage can be completed within a week if it’s a straightforward switch.
Can I cancel a mortgage product switch?
This depends on the terms and conditions of your lender. It’s best to check with them directly.
Product Transfer Mortgage Advice from a Mortgage Broker
A mortgage broker can offer invaluable advice on whether a product transfer is right for you. They have access to the entire mortgage market and can compare interest rates and deals from various mortgage lenders, ensuring you make an informed decision.
Using a Mortgage Calculator
A mortgage calculator is a useful tool to understand the financial implications of a product transfer. It can help you estimate your new monthly repayments and overall loan-to-value ratio.
Conclusion
Understanding your mortgage options can be intimidating, but understanding them will enable you to make informed decisions for your financial future. When selecting a product transfer or refinancing loan from a new lender, it is crucial that all factors are taken into consideration and you consult a broker so as to get the best deal available.
Looking to remortgage? Another question you may have is Loan or Remortgage: What should I get?
