Product Transfers Explained

If you have a mortgage with a product term expiring soon, you may be wondering what your options are. In most cases, people opt to remortgage when one product ends to secure a new deal with another lender. This is because remortgage products are typically more cost-effective than product transfer options.

Product transfers are similar to remortgaging, but you stay with your current lender. In some instances, a product transfer may be more suitable than a remortgage when your product term expires.

This guide explains product transfers and remortgaging in detail to help you make the best choice for your circumstances.

What is a Mortgage Product Transfer?

Mortgage lenders offer products that run for a fixed period of time. For example, you might choose a fixed-rate deal lasting two, three, or five years.

When that product expires, if you do not remortgage or arrange a product transfer, your mortgage will usually revert to the lender’s Standard Variable Rate (SVR).

An SVR is set at the lender’s discretion and is often less competitive than other available mortgage deals. For instance, your SVR might be 9%, whereas you could potentially secure a new deal at 6% for an initial period.

A product transfer allows you to stay with your existing lender but switch to a new mortgage product. The new product begins as your current deal ends, helping you avoid reverting to the lender’s SVR.

How Do They Work?

When your mortgage deal is approaching its expiry date, your lender and, if applicable, your mortgage broker will contact you to discuss your next steps.

Your lender will usually send a letter explaining that your current product is ending and outlining your options, including a product transfer. The letter will also explain what will happen if you take no action and confirm the Standard Variable Rate (SVR) that your mortgage will revert to.

If you arranged your mortgage through a broker, they will normally contact you to review your current circumstances before recommending either a product transfer or a remortgage.

In all cases, it is advisable to review your options with a whole-of-market mortgage broker rather than simply accepting your lender’s initial offer. A broker can compare your lender’s product transfer rates with deals available across the wider market to ensure you secure the most suitable option.

Boon Brokers takes a proactive approach when mortgage products are due to expire. Our automated system sends a text message, email, and postal letter six months before your deal ends. A broker is automatically assigned to review your case and will contact you promptly to help secure a new offer as early as possible.

What’s the Difference Between a Product Transfer and Remortgage?

With a remortgage, you switch your mortgage to a different lender. This means you effectively go through a full mortgage application again. The new lender will carry out affordability checks, credit checks, and a property assessment, similar to when you first took out your mortgage.

A product transfer, on the other hand, is completed with your existing lender. As they already hold your personal details and have previously confirmed that your property meets their lending criteria, the process is usually much simpler.

With a product transfer, you typically do not need to provide the same level of documentation or undergo the extensive checks required for a remortgage with a new lender.

Benefits of a Mortgage Product Transfer

There are several benefits to choosing a mortgage product transfer:

• You avoid reverting to your lender’s uncompetitive Standard Variable Rate (SVR).
• Your new deal is often cheaper to arrange, with many product transfers carrying no upfront fees.
• Product transfers can sometimes be offered and completed on the same day, compared to the typical 6–10 working days it can take to receive a remortgage offer.
• No legal work is required, unlike a remortgage which usually involves solicitors.
• If your property or circumstances are unusual and your current lender has been flexible, you may not be able to remortgage elsewhere.

The final point is particularly important. When reviewing the market, your broker may identify cheaper deals but still recommend a product transfer if your current lender is best suited to your situation.

Unusual Property Types

Each lender has its own property criteria. Most lenders prefer properties of standard construction, such as brick or stone walls with slate or tiled roofs.

Some lenders, however, are more flexible with non-standard construction or unusual property types. If your property falls into this category, a product transfer may be the most practical option.

Self-Employment and Limited Company Directors

Lenders vary in how they assess income for self-employed applicants and directors who own more than 25% of a limited company.

While some lenders are flexible, others have strict requirements and may request multiple years of accounts, averaging income over that period.

For example, one lender may accept just one year of accounts, whereas another may require two or more years and detailed financial records.

If you have recently become self-employed and do not yet meet the criteria to remortgage elsewhere, a product transfer with your existing lender is often the most suitable solution.

Disadvantages of a Mortgage Product Transfer

While mortgage product transfers offer convenience, they aren’t always the best choice. Generally, staying with your existing lender only makes sense if:

• Your circumstances prevent you from remortgaging with another lender.
• Your current lender is offering the most competitive product available.

In many cases, a broker can identify a better deal with a different lender. The potential savings from a remortgage often outweigh any associated fees.

A product transfer should never be considered in isolation. It’s important to compare the offer against all other available market options.

Using a whole-of-market mortgage broker is invaluable, as they can access a wide panel of lenders and find the best deal for your circumstances.

Brokers can also manage the product transfer process and may have access to exclusive intermediary deals. They will recommend a product transfer only if it is genuinely the best option for you.

Should You Go Direct to Your Lender for a Product Transfer?

No, it’s generally not advisable to go directly to your lender for a product transfer. Whole-of-market mortgage brokers have access to the same products as your existing lender, plus additional benefits that make using a broker more advantageous.

Some key benefits of using a whole-of-market broker for a remortgage or product transfer include:

• Fee-Free Service – with Boon Brokers, no fees are charged at any stage of the process.
• Access to Whole-of-Market Products – not limited to what your existing lender offers.
• Future Remortgage Tracking – Boon Brokers’ system automatically tracks your product to ensure you remain on the best deal when it expires.
• Hassle-Free Process – the broker handles all paperwork and liaises with the lender on your behalf.

Building a strong relationship with your mortgage broker can also make future remortgages or product transfers simpler and more efficient, as they will already understand your circumstances and preferences.

Speak to a Specialist

Boon Brokers is a Whole of Market Mortgage, Insurance and Equity Release Brokerage. Boon Brokers offers fee-free remortgage and product transfer advice. Contact us today to book your free consultation and find out if a product transfer or remortgage is the best option for you today.