Product Transfer Mortgage

When will the new product start?

You would normally arrange the product transfer to start when your current deal comes to an end. So if your current deal ends on the last day of February, you’d arrange the new one to start on the first of March. You then don’t have any time on the standard variable rate, and it’s a seamless process.

How will the new deal affect my monthly payments?

It depends on what you’re currently paying and what rates are available today. We’re currently in early 2026, and interest rates are currently around 4%, depending on your Loan to Value.

If you took a deal out two years ago, you were probably on 5% or 5.5%. A new deal would be cheaper than that, so your payments would come down. But if you’d taken a five-year deal, at 1.5% to 2% back in 2021, your payments would more than likely increase now rather than decrease.

With a product transfer or a remortgage, it’s always best to arrange the new product at the earliest opportunity, because interest rates in the last three or four years have been incredibly volatile. Rates have risen at very short notice.

Some people leave it right to the last minute, but if three weeks beforehand interest rates suddenly shoot up, you’re not getting the most cost-effective rate. If you secured it three or four months in advance and interest rates went up, you’re not affected. We will have tied in a rate for you.

If interest rates come down during that time, we would amend your rate to keep you on the most cost-effective deal. It’s a situation of ‘heads you win, tails you win’. Securing a rate sooner rather than later can be incredibly important in these days of volatile interest rates.

We’re talking today in mid-February 2026, and in the last two weeks rates have increased quite sharply. It’s against the run of play, because over the last five, six, seven weeks they have been coming down nicely.

Suddenly they’ve shot up, which has caught a lot of people out. But many of my clients have locked in rates with us, so they don’t have any issues. Locking a rate in sooner rather than later takes away that guesswork.

Can I borrow additional funds as part of the transfer?

Yes, it’s a perfect time to do it. A product transfer or a product switch is not means-tested.

A lender would just use their index valuation for the property – they wouldn’t send a surveyor. They wouldn’t run any income or affordability checks, which is unusual for mortgages.

However, if you’re increasing the amount you’re borrowing, or increasing or decreasing the term of the mortgage, they do require income and affordability confirmation. Amending that mortgage is means-tested.

Can I change the mortgage term length?

Yes, absolutely. You can borrow additional funds or amend a term. We often find at the moment that for clients who have been on a five-year fixed rate at around 1.5%, the new mortgage is quite a big increase.

One way to alleviate that is to extend the term. You do pay more interest, but in the short-term, it’s easier to afford the mortgage payments. To do that, your lender would want details of your income, any outgoings, and they would do affordability checks.

Can I change the repayment type?

Yes, you can. Again, it would be means-tested. Borrowing additional funds, changing the mortgage length, or changing from either a repayment to interest-only or vice versa would require affordability checks. But yes, you can do it.

Can I add or remove a borrower?

Yes, and it’s a perfect time to be doing it. It involves a ‘transfer of equity’ to take a partner off the mortgage or add them onto it. Again, it’s means-tested.

Generally, a product transfer isn’t means-tested if there’s no changes to your mortgage. But if your intention is to add or remove a borrower, change the repayment term, borrow more or change the length of the mortgage, there will be affordability checks. But all of these could be done at the same time.

Can I transfer products if I plan to move home?

Yes. I’ve got a client who is selling her house – they are a young couple who have got together and both own a home. It’s going to be tricky to sell two properties within the next four or five months when his deal ends, and hers comes to an end this month.

What we’ve done is put her onto a tracker rate mortgage. It’s not quite as cheap, but it doesn’t have any early repayment charges, so if she sells her house in a week, a month, three months, she can come away from that deal without any penalties.

The other benefit is there’s no cost to arrange it. It isn’t as cheap as some fixed-rate mortgages out there, but equally it’s much less than the standard variable rate. It’s a holding situation.

You do have to be a bit careful. If you transfer onto a five-year fixed deal and then decide to sell your home, you’ve snookered yourself a bit – because you’ve got to stay with that lender for the onward move or incur a large exit fee..

What happens if my deal expires before the transfer completes?

You would normally go on to the standard variable rate, which is high with most lenders – currently they are 6.5% to 7%. It does move up with a huge bump. That’s another reason for securing a rate nice and early and avoiding any issues down the line.

What else do we need to know about a product transfer?

Just that it’s best to arrange a product transfer nice and early. Look at the options. We would check what your current lender will offer you to stay with them, against what other lenders would offer you via remortgage.

We work out which will be right for you and arrange it nice and early. With some lenders, you can arrange a product transfer three months before – with others, it’s four or six months.

You don’t start making payments until your deal comes to an end, and you mitigate any interest rate increases in the meantime. A decent mortgage broker will talk you through the benefits of product transfer versus a remortgage.

Some lenders are better for product transfers than others. In the last few days, for one client to stay with his current lender on a two-year product, the rate was 4.68%, but a remortgage was 4.14% – a huge difference. He originally thought he’d stay with the existing lender – but that half a percent with the remortgage would save £30 a month for the next two years.

So, look at your options with a mortgage advisor – a remortgage or product transfer. In either case, get something signed and sorted, nice and early.

Key Takeaways:

• Secure a rate three to six months in advance to protect against volatile interest rate increases while still benefiting if rates decrease.
• Ensure the new product starts immediately when the current deal ends to avoid defaulting to the high Standard Variable Rate (SVR), which currently sits around 6.5% to 7%.
• A basic product transfer is not means-tested, but borrowing additional funds, changing the mortgage term or repayment type, or adding/removing a borrower will trigger income and affordability checks.
• Consult with a mortgage advisor to compare product transfer rates from your current lender against remortgage rates from other lenders, as the most cost-effective option can vary significantly.
• If you plan to move home, consider a tracker rate mortgage as a holding situation since it typically does not have early repayment charges, unlike long-term fixed deals.
  
  

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.