What Is a Product Transfer?
A product transfer means switching to a new deal with your current lender without going through a full remortgage application. Because you are staying with the same lender, the process is usually much simpler and quicker. There is typically no need for a property valuation, solicitor, or conveyancer.
Most lenders will contact you a few months before your current deal expires to offer you their available product transfer rates. You can usually complete the switch online or over the phone in a matter of days. Some lenders even allow you to lock in a new rate several months in advance.
The main advantage of a product transfer is convenience. The main disadvantage is that you are limited to one lender's range of products, which may not include the best rates on the market.
What Is a Full Remortgage?
A full remortgage involves applying for a completely new mortgage with a different lender. The new lender pays off your existing mortgage, and you begin making payments to them instead. This process involves a credit check, property valuation, and legal work to transfer the mortgage between lenders.
The main advantage of a full remortgage is choice. You have access to deals from across the entire market, which means you are more likely to find the lowest possible rate. Some lenders also offer incentives such as free valuations, free legal work, and cashback to attract remortgage customers.
The downside is that it takes longer and involves more paperwork. A full remortgage typically takes four to eight weeks, compared to just a few days for a product transfer.
Comparing the Costs
When deciding between a product transfer and a remortgage, it is important to compare the total cost of each option over the deal period, not just the interest rate. Consider the following:
- Interest rate – a remortgage may offer a lower rate, but the difference might be small.
- Arrangement fees – product transfers sometimes have lower fees, or no fees at all. Remortgage deals may charge arrangement fees of several hundred pounds.
- Legal and valuation costs – product transfers do not require these. Remortgage deals often include them for free, but not always.
- Cashback or incentives – some remortgage deals offer cashback that can offset the costs involved.
It is always worth calculating the total cost over the full deal period. A lower interest rate with higher fees might end up costing more than a slightly higher rate with no fees at all.
Which Option Should You Choose?
A product transfer may be the better choice if you want a quick and simple switch, if your current lender's rates are competitive, or if your financial circumstances have changed in a way that might make passing a new lender's affordability checks more difficult.
A full remortgage is often worthwhile if there is a meaningful difference in interest rates, if you want to borrow additional funds, or if you want to change the terms of your mortgage significantly. It is also worth considering a remortgage if your LTV has improved since you last took out your mortgage, as this may unlock better rates.
Speaking to an independent mortgage broker can help you compare both options properly. They can show you the best product transfer rates alongside the best remortgage deals so you can make an informed decision.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.