Product Transfer Mortgages

We’ll explain what a product transfer mortgage is, how they differ from remortgages and why speaking with a mortgage broker first is a smart move before you make any final decisions.

What is a product transfer mortgage and how do they work?

A product transfer mortgage is when you change mortgage deals with your current lender rather than remortgaging with a different provider. Product transfers don’t usually involve a full valuation of the property if the amount borrowed is unchanged, and this means that they can be very quick to complete.

If you’re refinancing with your current mortgage lender to borrow more, this would be classed as a specific type of product transfer known as a further advance. These agreements usually involve more eligibility assessments, a valuation and legal red tape.

Although product transfers can be relatively quick, taking your lender up on one without checking whether there’s a better interest rate deal elsewhere is not recommended. Speaking to a mortgage broker who has access to the entire market before you commit to a deal is strongly advised.

How are they different to remortgages?

They aren’t really any different, except a product transfer is a remortgage specifically with your current lender. Used generally, the term ‘remortgage’ can refer to refinancing with either your current lender or another one, but it wouldn’t be a product transfer if you were switching lenders.

In terms of the process involved, remortgaging with another lender can take longer than a product transfer and there may be extra steps to complete, especially if you’re borrowing extra. But with a product transfer, you’re limited to just one set of mortgage deals.

Work out your new mortgage payments

Use the product transfer calculator below to work out what your new mortgage payments and LTV will be after you’ve refinanced.

Mortgage product transfer vs remortgaging

The table below shows the advantages and disadvantages of a product transfer versus remortgaging with another mortgage lender…

In summary, the main benefit of agreeing to a product transfer over a remortgage is that it can be quicker to complete. Although you might also pay out less in upfront fees, keep in mind that you could end up out of pocket overall if you lock yourself into a deal with your current mortgage lender without checking whether there is a better one available elsewhere.

Can you borrow more when transferring a mortgage?

Yes, you can. A product transfer is essentially the same as a remortgage, so if you’d like to release some equity during the process – perhaps for home renovations or to consolidate other debts – then you can apply to do that at the same time.

How will your affordability be tested if you want to borrow more?

If you want to borrow more money your mortgage lender will want to know the following:

• How much you’re looking to borrow and why
• What your overall loan-to-value (LTV) will be
• Your current annual salary / monthly outgoings
• Credit record

Once they review this information they will check your requirements versus their eligibility and affordability criteria. From an affordability perspective, most lenders work on an income multiple typically of 4-4.5 times annual income. So, if the additional amount you want to borrow doesn’t move the overall mortgage outside these parameters – and other eligibility factors are fine – then the application has a strong chance of being approved.

The benefits of considering another lender (switching)

Taking your mortgage lender up on a product transfer without checking what other remortgage deals are out there is not recommended. It’s strongly advised that you speak to a mortgage broker and ask them to search the entire market for you to see what’s on offer.

If you talk to a mortgage broker before settling on a remortgage option, this will open an entire market of products up to you. If the rates your current lender is offering really are the best available, your broker is obliged to tell you this and advise you to stick with that mortgage provider.

Using our free mortgage broker-matching service you can speak straight away to the right broker by simply making an enquiry online. They’ll be able to help with:

• Downloading and optimising your credit reports giving you a better chance of approval with another mortgage lender offering better rates
• Preparing any necessary paperwork making the application process seamless
• Finding the right mortgage lenders offering the best remortgage rates available across the whole market

Conditions which mortgage lenders place on product transfers

Some mortgage lenders apply specific terms, conditions and caveats to their product transfers, and we’ve rounded up some examples of what you might encounter in the table below.

(All of the above information is correct at the time of writing. Mortgage lending criteria can be subject to change at any time at the lender’s discretion.)

As you can see, some of the above lenders do offer perks to existing customers, but even with that factored in, there’s no guarantee it’s the very best deal for you.