Remortgaging vs Product Transfer: What’s Best for You?

When your current mortgage reaches closer to its expiry date, it can feel as though you are standing at a crossroads.

Do you stay with your existing lender and process a quick product switch? Or, do you look elsewhere and remortgage to a different lender altogether? All homeowners should weigh up their remortgage vs product transfer options.

The difference between a product transfer and remortgage isn’t always obvious at first glance. One can offer simplicity, speed and convenience. Whereas the other may present opportunities for new rates and features, but require a longer process to achieve.

In this guide, we’ll explain both routes, helping you understand how they work. You can then decide which option works best for you.

Let’s get started.

What Is a Product Transfer?

A mortgage product transfer is used to switch to a new deal with your current lender rather than moving your mortgage to a different bank or building society. In simple terms, it’s changing the rate/product while keeping the same lender.

If you have ever asked, “what is a mortgage product transfer?”, the answer is straightforward. It’s an internal switch with your current provider. For example, your current lender offers you a new deal, such as a fixed or tracker, and you agree to move onto it once your current deal expires.

With a product transfer mortgage, the process is often simpler than remortgaging. Because you are not changing lenders, there’s often less paperwork. In some cases, lenders will not process an affordability re-assessment, meaning they will not need to see any income documentation.

Understanding a product transfer mortgage is important for all homeowners weighing up their options, to avoid moving to the lender’s Standard Variable Rate. However, if you opt for a product transfer instead of a remortgage, you will only choose from the products offered by the existing lender rather than the wider market. This may result in a higher overall cost if more competitive deals are available elsewhere.

A product transfer can suit borrowers who want a straightforward switch, but you should at least be aware of other deals available on the open market. That’s why using a fee-free broker, like Boon Brokers, can be invaluable. From our whole-of-market access, Boon Brokers can assess your requirements and recommend an option suitable for your circumstances, subject to affordability and lender criteria. We do this without it costing you a penny at any stage of the process.

What Does Remortgaging Mean?

If you’re wondering what remortgaging means, it refers to replacing your current mortgage with a new one. Your existing mortgage is technically redeemed by another mortgage from a different lender.

Ideally, your remortgage should take place on the day that your existing deal expires and switches to the lender’s Standard Variable Rate. This is because, at that point, there will be no early repayment charges payable for redeeming your mortgage. Be aware that if you decide to remortgage before your current deal expires, you may receive early repayment charges. This is especially likely if your current deal is on a fixed interest rate.

We often receive the question: “what does it mean to remortgage a house?”. Your new lender pays off your existing mortgage and you begin your new contract. The property remains the same but the loan terms will change.

The remortgage process usually involves the following steps:

• Full Affordability Assessment
• Credit Checks
• Property Valuation
• Legal Work

These steps can take a few months to process so, ideally, you should get in touch with your broker 6 months before your existing deal expires. This will ensure that the remortgage process completes before your current deal switches to the lender’s Standard Variable Rate.

Raising Capital

Not only can you find a better interest rate when remortgaging, but you may also be able to raise money. If you have equity in your property (which is the difference between the property value and your mortgage balance), you may be able to borrow against it to raise money. Borrowers raise capital for lots of different reasons including debt consolidation, home improvements, to purchase other property, and more.

It’s important to compare not just the interest rate with a mortgage, but also the fees, flexibility, and overall cost of the product over the term. Speak with an expert broker from Boon Brokers to find the most suitable remortgage deal for your circumstances.

Is It Better to Remortgage or Do a Product Transfer in the UK?

There isn’t a single answer as to whether it’s better to remortgage or get a new mortgage deal through a product transfer. The right choice will depend on your financial position and future plans.

A product transfer keeps you with your current lender. It can be attractive as it can often be processed in just a few clicks from either yourself or your broker. Whereas remortgaging gives you access to a wider range of lenders and products. That broader choice can mean that more suitable mortgage deals become available, but it also requires a full application, affordability assessment, and legal work to complete.

For most borrowers, the decision will largely hinge on the level of savings given from a remortgage. If a remortgage is going to result in a significant financial saving, you may wish to consider it as the additional work involved compared to a product transfer will be worth it.

Some borrowers may have no choice but to remortgage due to a change in their circumstances. For example, if someone has to urgently repair their roof and they need to raise funds to do so, their existing lender may refuse to lend for that capital raising purpose. Whereas this scenario may be acceptable to a remortgage lender.

Is a Product Transfer Easier Than Remortgaging?

Yes, in many cases a product transfer is easier than remortgaging. Since you are staying with your existing lender, the process involves less administration and fewer checks.

With a product transfer, there is typically no need to do a full mortgage application, legal work or new property valuation. Many lenders allow you to switch deals online a few months before your deal expires, often through their mobile application. For borrowers who don’t want the hassle of remortgaging or don’t need to borrow further funds, a product transfer is the most straightforward option.

However, it’s important to understand that a product transfer may not be automatically accepted by your current lender. A common question is: “can you be declined a product transfer mortgage?”. The answer is yes, in certain circumstances. For example, if you now have arrears on your credit file (such as defaults, late payments and county court judgements), your existing lender may refuse your application.

By comparison, remortgaging always requires a full mortgage application. In fact, the mortgage application process will be the same as you experienced when you first bought your property. As you will know from when you purchased your property, the application process can take time to complete and will require a full underwriter assessment.

While a product transfer is often easier from a convenience perspective, you should still base your decision on the overall cost, suitability and how it fits into your future plans.

Can You Get a Better Mortgage Rate by Remortgaging?

Many homeowners ask: “can you remortgage for a better rate?”. The answer is, potentially, but not always.

Remortgaging will give you access to the wider market. There are over 90 mortgage lenders in the UK, so remortgaging may unlock hundreds of products to choose from. Given the sheer volume of remortgage products offered in the UK, many homeowners find that lower interest rates are available with a remortgage rather than a product transfer.

Another question is, should you expect access to lower interest rates when you remortgage? Remortgaging does not always guarantee a lower interest rate. Securing a lower interest rate depends on several factors, including:

• Your Income and Credit Profile
• Your Loan-to-Value Ratio
• Current Market Conditions

Your Income and Credit Profile

As already discussed, if your income or credit report has worsened since your original mortgage application to purchase the property, you may not be able to access a better interest rate when the remortgage becomes due.

If your circumstances have significantly changed for the worse, you may find that you can only access specialist adverse credit lenders, who are willing to lend to borrowers with poor credit profiles. Interest rates offered by adverse credit lenders are normally far higher than those offered by mainstream alternatives, due to their risk exposure of the mortgage not being repaid.

Your Loan-to-Value Ratio

The Loan-to-Value for your property will directly impact the mortgage interest rates available to you when you come to select a remortgage or product transfer. At the time when you need to decide between a remortgage or product transfer, your loan-to-value ratio will have changed.

For example, your property value may have increased due to inflation and your mortgage balance should have reduced – assuming you make capital repayments. These two changes will improve your loan-to-value ratio, which may give you access to better mortgage deals.

Current Market Conditions

As we have seen in recent years, changes in the general market conditions can have a significant impact on the mortgage deals offered for a remortgage or product transfer. Unfortunately, interest rates rose sharply in 2022 and remained elevated until 2024. Even if your loan-to-value improved, you may have been surprised to see far higher interest rates being offered at that time.

Regardless of the improvements you make to your income, credit profile or loan-to-value ratio, changes to market conditions may have the greatest impact on the mortgage deals available to you.

What’s the Best Way to Choose Between a Product Transfer and Remortgaging?

Before you decide on a product transfer or remortgage, you need to understand the advantages of both options.

Here’s a table summarising the benefits and drawbacks of selecting a remortgage or product transfer:

As you can see, there are many features to consider before making a decision. You should consult with a whole-of-market broker, like Boon Brokers, who can advise you on the most suitable mortgage deal for your exact circumstances.

Can a Mortgage Broker Help You Decide Whether to Remortgage or do a Product Transfer?

Yes, a mortgage broker will be able to help you decide. A regulated broker’s job is to advise and arrange your mortgage by sourcing the market. As long as the broker has whole-of-market access to mortgages, and an excellent reputation, you should be confident in their ability to assist you.

Many homeowners ask, “do I need a mortgage broker to remortgage?”. The answer is no, you can approach lenders directly. However, a broker can provide a clear comparison of rates, fees, and many other product features that you may not have considered.

For many homeowners, it’s sensible to consider using a fee-free, whole-of-market broker, like Boon Brokers, to process your remortgage or product transfer. You will be able to access options from over 90 lenders without it costing you a penny at any stage.

Lastly, a key reason to use a broker, even for a product transfer, is so that they can keep your mortgage on their records. If a better deal becomes available to you in the future, a reputable broker will get in touch to ensure you can access it. If you are considering a remortgage or product transfer, contact Boon Brokers and allow our expert broker team to explore your options.