Product Transfer Mortgage

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Product Transfer Mortgages with Steven Hargreaves.

What is a product transfer mortgage?

It’s choosing a different product with the same lender. So, if your current mortgage is with Halifax or Nationwide, you’re going back to that same lender and seeing what else they will offer.

What’s the difference between a product transfer and remortgaging?

A remortgage is when you decide another lender has a better deal and take the mortgage that you’ve currently got to them instead. A product transfer is staying with the same lender but on a different mortgage product.

Who suits a product transfer?

It’s dependant on your existing lender and what they can offer. I contact my existing clients between three and six months prior to their current deal coming to an end. At that stage I  look at their circumstances, whether there’s stability for the next five years or do they plan to move within a couple of years; then I work out what their current lender would offer them. I would also research the market and see what other lenders may offer and compare whether it would be more beneficial to recommend a product transfer or a remortgage.

There isn’t a particular type of person who suits a product transfer. There are certain times where a product transfer is useful, for example if income is lower or harder to prove than it was a couple of years ago when the original mortgage was taken. A new lender may therefore not take that client on as a remortgage, but a product transfer through their existing lender might still be possible.

When would I need a product transfer?

Each lender is slightly different, some will only allow a product transfer three months before the client’s’ current deal comes to an end, whereas others will permit it as far as six months in advance. Interest rates have increased quite rapidly over the last two or three months, so there has been a massive rush for both remortgages and product transfers.

How long does a Product Transfer take?

A remortgage is means tested, so the lenders would look at the affordability, assets and liabilities. They would send a valuer to the property in many cases, and there would be a solicitor involved. Some providers offer free legal fees and valuations but the work still takes time and therefore the average time for a remortgage is probably around six weeks.

A product transfer could possibly be secured within 10 minutes, but wouldn’t take effect until the current fixed-rate comes to an end.

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What are the main advantages and disadvantages of a product transfer?

The main advantage for a product transfer is speed. The lender, in the majority of cases, will not require income verification unless you have an issue with the valuation. There’s no solicitors involved, the process is normally fairly instant and simple.

What are the product transfer rates and fees?

It really depends on the lender, if interest rates keep increasing, it will most likely be a remortgage that will be the better deal for the client. We discuss what the client wants, research the market and then decide which route is best; a product transfer or remortgage. We will also discuss the fees and interest rates at the same time.

Is it worth paying a product fee on a mortgage?

It depends on the interest rate and how much you owe the lender. The interest rate on a two-year, fixed-rate with a product fee is often lower than a two-year fixed-rate with no product fee, so paying a product fee could be beneficial in some cases, depending on how much you will save by paying one, versus not paying one.

Each mortgage is different and it depends on the size of the mortgage and the deal that the lender is offering.

Is it better to stay with your existing lender?

It depends on your circumstances. There isn’t a right and there isn’t a wrong answer. It’s all about knowing your client, talking about their aspirations, whether they’re going to be moving house over the next two or three years. It’s not always beneficial doing a transfer on a small mortgage of £50-60,000 as the product fee would likely outweigh the benefits of a cheaper interest rate.

When you do a product transfer do lenders check your credit score?

No they don’t, and that’s another benefit of a product transfer. If your remortgage is declined due to a poor credit score, a product transfer could be an alternative as there are no credit scores or credit checks involved.

How can a mortgage broker help?

Many people tend to forget about the upcoming expiry of their fixed rate, so as brokers, we often reach out to a client to see whether a remortgage or product transfer would be beneficial to them. Before you make a decision, consider all the options, to work out which is going to be the most suitable for your circumstances.

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