Welcome back to the remortgage podcast. On this episode we’re talking all about product transfers with Craig Skelton from Renew My Mortgage.
What is a product transfer mortgage?
A product transfer is when your initial rate comes to an end and you decide to stay with your existing lender, but on a new mortgage deal. Rather than moving to another lender for a new deal, you stay with your current lender and once your current term comes to an end – at the end of two years, or three or even five, whatever the case may be – you will then automatically go on to the new product that you’ve selected.
What’s the difference between a product transfer and remortgaging?
With a product transfer you stay with your existing lender. Remortgaging means that you’ve gone out into the marketplace looking at different lenders to see who’s offering the best deal. You then remortgage with the best lender. So a product transfer is staying with your existing lender, while remortgaging is moving to another provider.
Who suits a product transfer?
With product transfers it’s often just a matter of clicking a button, so there is no requirement to provide payslips or new property surveys or anything like that. So a product transfer is quicker. But what you need to bear in mind is that a product transfer is not necessarily the best deal.
So if you are thinking about getting another two year, three year, or five year mortgage deal, it’s better to look at the marketplace for the best deal. Remortgaging isn’t that complicated – it’s much easier than taking out a mortgage when you first buy a home.
When would I need a product transfer?
Your lender will generally write to you around six months before your deal is up. They will give you a list of products available at that particular time for you to then switch onto.
Every lender is different – some will write three months before the deal ends and some leave it a little bit later than that, but generally speaking you’ll hear from them about new product offers.
How long does a product transfer take?
There’s no need to provide any payslips or bank statements, there are no surveys, so it literally is a case of pressing a button – you just tell your mortgage provider which deal you want to take. Then everything is set in place ready for when your deal ends.
What are the main advantages and disadvantages of a product transfer?
The big advantage is speed. It’s a lot quicker because there are no documents to provide. Normally, as soon as one deal ends you’re automatically moved to the next product. There is no time on the SVR as we’ve talked about previously.
In terms of disadvantages, generally speaking a product transfer is not always the best deal on the market. It’s good that it’s quicker, easier and simpler, but you could be paying more each month more for the product transfer than you might on other products in the market.
A common frustration is that the deal your provider offers you is not as good as the offers they give to a new client. So really you’re paying more for loyalty to your lender.
What are the product transfer rates and fees?
The rates generally vary widely depending on the provider and the Loan to Value for your mortgage – that is, how much the property is worth compared to the mortgage outstanding on it.
With regards to fees with product transfers, there are still arrangement fees so it’s good to compare the options. Using Renew My Mortgage will explore what your existing provider is offering you in terms of rates and fees and compare that with the rest of the marketplace. That way you can make an informed decision.
Renew My Mortgage is free of charge so you have everything to gain from exploring the options.
Is it worth paying a product fee on a mortgage?
Again, it depends on the house value and the loan outstanding on it. Generally, the lower the interest rate, the higher the product fee. So if you’ve got a really small mortgage you’re best advised not to go with a mortgage with a product fee – because the difference in the interest rate really won’t make much difference to you.
Meanwhile for people that have got a considerable outstanding mortgage it might be better to pay a product fee if it means you’re getting a good interest rate. Plus, you can add that product fee to the loan.
Renew My Mortgage will compare the rates and fees overall to explore the total cost of borrowing and work out what’s best for you.
Is it better to stay with your existing lender?
There’s no simple answer as it will depend on your specific situation. Mortgage lenders don’t always repay loyalty with the best rates.
Renew My Mortgage takes the stress out of deciding what’s best. Your mortgage broker will work behind the scenes to advise you whether it’s better to stay with your existing lender or not, given your unique circumstances.
When you do a product transfer do lenders check your credit score?
No, they don’t check your credit. It’s just a case of switching you from one product to another. There’s no credit check, no bank statements or documents or anything like that.
Any other advice for people considering a product transfer?
The main thing is not to take the product transfer just because it’s the easiest thing to do. Renew My Mortgage will look at that for you, to make sure you’re getting a good deal.
You’ve got to think that you’ll be paying this mortgage for the next two, three or five years and an extra £50 a month makes a big difference – and it’s better in your pocket than the mortgage lender’s.
Renew My Mortgage is a trading name of CS Financial Group Ltd who is a Limited Company registered in England & Wales no. 10731629. CS Financial Group Limited is an appointed representative of The Openwork Partnership, which is authorised and regulated by the Financial Conduct Authority.