Remortgaging vs. Product Transfers Our Guide
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How to Choose the Right Path for Your Next Mortgage Deal
If your current mortgage deal is coming to an end, you’ve likely started hearing the words "remortgage" and "product transfer" thrown around. In today’s shifting economic climate, making sure you are on the best possible mortgage rate is more important than ever.
But what exactly is the difference between these two options, and how do you know which one is right for you?
Here at Bristol Mortgages Online, we help homeowners across Bristol, the South West, and the wider UK make sense of their mortgage options. Here is our straightforward guide to remortgaging and product transfers to help you secure the best deal.
The Danger of the Standard Variable Rate (SVR)
Before diving into your options, it is crucial to understand why you need to act.
When your initial mortgage deal (such as a 2-year or 5-year fixed rate) expires, your lender will automatically move you onto their Standard Variable Rate (SVR). The SVR is set by the lender, fluctuates at their discretion, and is almost always significantly more expensive than introductory rates.
To avoid a sudden and steep increase in your monthly repayments, you need to switch to a new deal before your current one ends. You have two main ways to do this: a Product Transfer or a full Remortgage.
Option 1: The Product Transfer (Staying Put)
A product transfer is exactly what it sounds like: you transfer from your expiring mortgage product to a new mortgage product with your existing lender.
The Pros:
Speed and Simplicity: Because your lender already knows you and holds the deeds to your property, there is usually less paperwork.
No Legal or Valuation Fees: Most product transfers don't require new legal work or physical property valuations, saving you upfront costs.
No New Credit Checks: Lenders typically do not run a hard credit search for a product transfer, which is beneficial if your credit score has dipped or your employment situation has recently changed.
The Cons:
Limited Choice: You are restricted solely to the rates your current lender is offering, which might not be the most competitive in the broader market.
Borrowing Limitations: If you want to borrow additional money (release equity) for home improvements or debt consolidation, a simple product transfer usually won't cover it; you would likely need to apply for a further advance, which involves more underwriting.
Option 2: Remortgaging (Switching Lenders)
A remortgage involves moving your entire mortgage debt from your current lender to a new lender.
The Pros:
Access to the Whole Market: This is the biggest advantage. By shopping around, you can often secure a much lower interest rate, saving you thousands of pounds over the life of your mortgage.
Better Flexibility: Moving lenders allows you to completely restructure your mortgage. You can change the term length, overpayment allowances, or switch between fixed and tracker rates easily.
Capital Raising: Remortgaging is an excellent time to borrow more against the equity in your home if you need funds for renovations or other major expenses.
The Cons:
More Paperwork: You will need to provide up-to-date proof of income, bank statements, and undergo a full affordability assessment.
Fees: There can be valuation and legal fees involved in moving lenders, though many lenders offer "free legals" and free valuations as incentives to win your business.
Which Option is Best for You?
There is no one-size-fits-all answer. If you value a fast, low-admin process and your current lender is offering a decent rate, a product transfer might be ideal. However, if you want the absolute cheapest rate available, or if your financial goals have changed, a full remortgage is usually the way to go.
This is where a mortgage broker comes in. At Bristol Mortgages Online, we don't just look at remortgages; we actively compare the product transfer rates your current lender is offering against a wide choice of lenders in the UK market. We factor in all fees, your current property value, and your long-term goals to calculate exactly which route will save you the most money.
When Should You Act?
You should start looking at your options six months before your current deal ends. Mortgage offers (both for remortgages and product transfers) can typically be locked in up to six months in advance. Securing a rate early protects you against future rate rises, but if cheaper deals become available before your current mortgage expires, we can often switch you to the lower rate.
Ready to find out how much you could save?
Don't let your mortgage roll over onto a costly SVR. Let us do the heavy lifting and compare your product transfer and remortgage options for you.
How to Contact Us for Advice
Phil Clark will personally deal with your enquiry
Tel 0117 325 1511
Email info@swmortgages.com
Complete a form via our website www.bristolmortgagesonline.com
Please remember: YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
