When your mortgage deal ends, your lender will usually move you onto their Standard Variable Rate (SVR), which is often significantly higher than the rate you were previously paying.
A product transfer allows you to switch to a new mortgage deal with your existing lender rather than remortgaging elsewhere. As you are staying with the same provider, the process is often quicker and may not require a full affordability assessment, property valuation or hard credit check.
Many homeowners are unaware that staying with their existing lender may still be possible even if their financial circumstances have changed since taking out their mortgage. Because of this, a product transfer may provide an alternative for borrowers who are concerned about qualifying for a new mortgage with a different lender.
In this guide, we explain:
- How product transfer’s work.
- Why a product transfer may be worth considering.
- The potential benefits of a product transfer.
- The key considerations to be aware of.
What is a product transfer?
A product transfer refers to the switching of your mortgage deal with your existing lender rather than moving to a new lender. Product transfers typically allow you to switch to a new fixed, tracker or discounted variable rate product. Lenders will generally allow you to switch to a new mortgage deal when you are approximately three to four months away from the end of your current deal.
Many lenders do not require a full affordability assessment or hard credit check for a straightforward product transfer, although individual lender policies vary. As a result, this is a popular option for those whose financial situation may have changed (e.g. changes to income or increased outgoings) since they first secured their mortgage.
Why should I consider a product transfer over remortgaging?
A product transfer can provide a more efficient way to move onto a new mortgage deal with your existing lender, often helping borrowers secure a more competitive rate than the Standard Variable Rate (SVR). As the process does not involve changing lenders, it is typically less complex than a full remortgage application and may involve fewer administrative steps.
Your financial circumstances may have negatively changed
Product transfers can be particularly useful where a borrower’s financial situation has changed since their original mortgage was arranged. This may include:
- A reduction in income.
- Increased household or living costs.
- Adverse changes to credit profile or borrowing history.
In these circumstances, meeting the criteria for a new lender may feel more challenging.
As a result, some borrowers may feel they have limited options, often due to a lack of awareness of alternatives such as product transfers and remain on their lender’s variable rate which can be more costly over time.
You may wish to secure a new deal through a simpler process
A product transfer can help bridge this gap by allowing borrowers to move onto a new deal with their existing lender, without the need for a full remortgage application.
This can provide:
- A more stable monthly repayment structure compared to the lender’s variable rate.
- Access to potentially more favourable fixed or variable rates compared to your lender’s variable rate, which is typically higher than standard mortgage rates.
- A streamlined route compared to applying with a new lender.
While not every borrower will qualify for every product available, a product transfer can offer a valuable option for those looking to adjust their mortgage without undergoing the full remortgage process.
What are the benefits of a product transfer?
Product transfers offer several practical advantages for homeowners looking to move onto a new mortgage deal with their existing lender. While the exact benefits will depend on individual circumstances and lender criteria, they are often seen as a simpler alternative to a full remortgage.
- No full affordability or credit assessment (in most cases).
One of the key advantages of a product transfer is that it may not require a full credit search or affordability assessment. This can make the process more accessible for borrowers whose financial circumstances have changed for the worse since their original mortgage was arranged.
- It is typically a quicker, more streamlined process.
As a product transfer involves remaining with your existing lender, the process is often more straightforward than a traditional remortgage as the lender already has your details. In many cases:
- A property valuation is typically either free or not required.
- Less documentation is needed.
- Applications can be processed more efficiently.
This can make product transfers a more time-efficient option when compared to moving lenders.
- Actively avoids Standard Variable Rate (SVR) costs.
A product transfer can allow borrowers to move away from their lender’s SVR, which is often higher than available fixed, tracker or discounted rates. This may help reduce monthly repayments and provide greater payment certainty over a set term.
- Reduced legal and administrative costs.
Unlike a full remortgage, product transfers generally do not require legal work or solicitor involvement because ownership and the lender remain unchanged. In many cases, the main cost to consider is an arrangement or product fee, depending on the chosen deal.
As no new mortgage is being taken out with a different lender, there are usually no legal fees associated with the transfer itself. However, it is still important to consider any existing Early Repayment Charges (ERCs) that may apply to your current mortgage product.
- Potentially more competitive rates.
Lenders offering product transfers may offer you more competitive rates as an existing customer than those available to new borrowers, helping you potentially secure a better deal while remaining with your current lender.
Are there any key considerations for product transfers?
While product transfers have several benefits, there are still important factors to take into consideration before making a decision, including:
- Limited choice of mortgage products.
When choosing a product transfer, you are restricted to the range of mortgage deals offered by your existing lender. This may mean fewer options compared to the wider mortgage market, where different lenders may offer more competitive rates or broader product options.
As a result, while a product transfer can be convenient and more cost-effective compared to a standard remortgage, it may not always provide the most suitable or competitive deal available overall. In some cases, borrowers may find better value by reviewing alternative lenders through a full remortgage.
- Fees and charges may still apply.
Although product transfers are often less complex than a full remortgage, certain costs may still apply. These can include:
- Product or arrangement fees.
- Early repayment charges (depending on your existing deal and timing of the switch).
It is important to review the full cost of any new deal with a mortgage adviser before proceeding.
- Limited flexibility on mortgage changes.
In most cases, product transfers are designed as a like-for-like switch. This means flexibility can be limited if you want to make wider changes, such as:
- Changing your mortgage term (e.g. lengthening the term to lower repayments).
- Adding or removing borrowers (e.g. due to getting married or divorced).
- Increasing borrowing (e.g. additional borrowing for home improvements).
Where changes are possible, your lender may require a full affordability assessment which will be similar to that of a standard mortgage application.
- Eligibility may depend on payment history.
Lenders will typically take your payment history into account when offering product transfer options. Missed mortgage repayments or arrears may limit the deals available to you or affect your overall eligibility for a product transfer.
- Product Transfer window.
Lenders will typically allow you to switch to a new mortgage deal around three to four months before your current deal ends. In comparison, if you are remortgaging to a new lender, you can generally apply for a new deal up to six months before your current deal expires.
This may be an important consideration if you are hoping to secure a new rate earlier or want more time to review your available options before your current deal ends.
How can Cooper Associates Mortgages help?
If you are feeling trapped by your lender’s variable rate, worried about an upcoming swap to your SVR, or have questions regarding the remortgaging process, Cooper Associates Mortgages are here to help.
Our expert advisers strive to gain a full understanding of your unique situation and goals, offering bespoke advice that is tailored to your personal circumstances. This ensures each of our clients receives the best possible mortgage advice and can make a decision with confidence and clarity.
To begin the journey of discovering the best route for you, get in touch with us today to book a fee-free, no-obligation consultation. Our team are always happy to help.
