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Mortgage product transfers

The key information you need to know about transferring your mortgage.

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By Pete Mugleston   Mortgage Advisor

Last updated: 26th January 2019 *

We receive plenty of enquiries from customers who are looking to carry out a product transfer with their current provider but are unsure whether to opt for this over an alternative, such as remortgaging. Perhaps you have experienced some difficulties in carrying out a standard mortgage product transfer - for example, if your circumstances have changed since you originally took out your home loan, and you need to extend the term or borrow more money.

The good news is that we’re on hand to help, and there are options available. This article will help you understand the difference between product transfers and remortgaging, and decide which option is most suitable given your circumstances. We will be covering:

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What is a product transfer mortgage?

So, how do you define a product transfer mortgage and what does this term actually mean?

A product transfer is when you move from your existing mortgage deal to a new one with your current lender. While it is not a new concept, a product transfer is a lesser known option which may be a good alternative to remortgaging, depending on your circumstances.


Mortgage product transfers explained

This example should help put things into perspective: Supposing you’re currently on your lender’s Standard Variable Rate (SVR) and it’s increased recently due to an interest rate rise, you may consider moving on to a fixed rate mortgage plan.

Assuming you want to keep your loan amount the same and are happy with your current lender, this would be classed as a product transfer because you’re just moving from one product to another.


What is the mortgage product transfer procedure?

The product transfer process is typically very straightforward. This is due to the fact that, unlike if you were requesting an advance or going down the remortgage route, it is unlikely that a formal valuation will need to be carried out on your property.

Product transfers can usually be quickly arranged with your lender either over the phone or in branch. The applicant(s) may be subject to an affordability check (however, some high street lenders do not require this to be carried out with standard product transfers), in which they will complete an income and expenditure form. Once this has been completed and provided the credit check is approved (if applicable), the borrower will be provided with a product transfer document to sign. A handful of lenders may also require a re-evaluation of  proof of income, but many do not.

Many lenders use property valuation software which return results very quickly, meaning that the whole process can potentially be completed in as little as a week.


Mortgage product transfer rates and fees

So, what costs are associated with product transfers? While mortgage product transfer fees will vary from lender to lender, standard product transfers are a lot less hassle to process than a new mortgage application or remortgage, for example, therefore making it a cheaper option in many cases.

A common reason lots of borrowers opt for an alternative to product transfers are due to the rates they’re on with their current lender.

For example, the rate you’re charged by your provider may be a lot higher than what a competitor is offering. In this situation you may be tempted to change provider, which would mean remortgaging.

While this may seem like a no-brainer, it’s important to bear in mind that remortgages tend to take longer to arrange and there are more steps involved, and can therefore be more costly - so you have to ensure that you can justify the associated fees in relation to the interest you’d save by switching.

We’ll be discussing this in more detail later on.


What’s the difference between product transfers and remortgaging?

So, how do you know whether a remortgage or product transfer is best for you, and what’s the difference between the two?

As covered, a product transfer is typically a simple process involving switching from one mortgage product to another with your existing lender.

If on the other hand you decide that you want to borrow more money this would be classed as a “further advance” if you stay with your current lender, or a remortgage if you decided to move to a new lender at a different rate, for example.

When it comes to further advances (and any other other form of ‘non-standard’ product transfer, for example extending the terms of your mortgage), or remortgaging however, the process involved is more extensive. It will usually require a full mortgage valuation need to be carried out, there are the legal requirements to consider, as well as the usual credit checks and affordability assessments.


Pros of a product transfer vs remortgaging

Due to having more steps and checks to deal with if you opt for an alternative to a product transfer, it’s likely that the process will take longer. There are more people involved and therefore the whole thing will likely be more costly to arrange. The main pros of a product transfer over the alternatives are:

  • In most cases you will not be subject to a full valuation
  • There are not usually any legal steps or fees to pay
  • Fewer fees overall due to fewer stages and people involved in the process
  • Less paperwork to fill out

In a nutshell, product transfers are simpler and faster to process and sign off, therefore less costly for the borrower.


Disadvantages of a product transfer vs. remortgaging

Product transfers can be a good option for many, but the main con is that you may be restricting yourself by sticking with your current lender.

As mentioned above, other mortgage providers may be able to offer you far more competitive rates than your current one, meaning that you could potentially save a lot of money in the long run by switching to a new provider.

If you’re considering a product transfer, we can't stress the importance of seeking advice from a whole of market broker. Depending on your circumstances, remortgaging could be a far more cost-effective option.

Get in touch and we’ll refer you to a specialist advisor who will search the whole market to find the best deal for you, offer you expect advice and introduce you to the right lender


Factors impacting non-standard product transfers and remortgages

In the case of a ‘typical’ product transfer, lenders are unlikely to carry out the same amount of checks as they would with new mortgage applications. However, if you’re applying for a ‘non-standard’ product transfer or a remortgage it’s a different ballgame.

For example, if you’re applying for additional borrowing, or there’s a fundamental change to the mortgage type (for example, a change of repayment type or term), or a remortgage, then lenders will usually want to re-assess some key additional factors which may impact eligibility, which we will be covering below.

If you’re experiencing multiple issues simultaneously this will often further restrict the number of remortgage lenders available - but it doesn’t mean it’s not possible. Here are a few of the most common:


Age and non-standard product transfers

If you’re an older borrower looking to extend your mortgage term, for example, you may be limited to the number of lenders willing to offer an extension. Some lenders have a cap on the maximum age you can apply at, or the age you will be at the end of the term. Other providers will not consider lending if you’ve retired due to lack of a steady income.

However, this does not apply to everyone, and there are options available out there regardless of your circumstances. Some lenders have no maximum age limit, and there are borrowers who are happy to lend if you’ve retired, while of course taking affordability and other circumstances into consideration.


Over 55? you may be eligible for equity release

If you’re over the age of 55, you may be able to go down the equity release route. These mortgage products allow senior borrowers to release some of the cash that’s tied up in their property without leaving their home. This capital can be used for any purpose and there are typically no monthly repayments to foot.

Eligibility is based on the value of the property and the amount of equity you already own, as well as your age and current state of health.

Lenders will assess the property value alongside your predicted life expectancy, as they will want to know that the value of the loan they provide you with is going to be covered by the property when it is sold, after you pass away or go into care.


Non-standard product transfers on buy to let (BTL) properties

If you’re looking to change your mortgage terms with your current lender or remortgage with an alternative provider, the process can be a slightly more complex with a buy to let (BTL) than a residential property.

For example, you may have access to fewer providers, and those that are willing to lender may have stricter eligibility requirements surrounding the property’s loan to value (LTV) ratio, income, and the lender will need to be confident that the projected rental income is enough to keep up with the mortgage payments.

If you’re considering a product transfer on your BTL or second home, contact us and we can put you in touch with a specialist who can point you in the best direction considering your circumstances.


Deposit and non-standard product transfers

For a conventional product transfer, your existing deposit should suffice. If you’re considering remortgaging however, typically the very minimum deposit a lender will accept for a residential property is 5%, 15% for buy to lets, and 25% for a bridging loan. However, the higher risk your circumstances, the more deposit you are likely to require for lenders to consider a remortgage application.


Where can my deposit come from?

The source of deposit will be an influencing factor; some are perceived higher risk than others, and may restrict your options when it comes to providers. For example, personal savings or sale of a previous property tends to go unquestioned by most lenders, including high street banks. Gifted deposits from close family members, or money from legitimate sales of other assets (that can be accounted for) are other forms of deposit that are widely accepted.

Gifted deposits from more distant relatives, funded by a gambling win or overseas savings are typically not accepted by many providers, but some, including mainstream lenders may be happy to consider a gifted deposit from non-immediate family.

Gifted deposits from friends or employers, personal loans or cash deposits are very rarely accepted, although there are new lenders popping up all the time so there may be a few that will consider you if this is the case.


Income and affordability and non-standard product transfers

When it comes to assessing your eligibility for any mortgage, providers will want to know how much disposable income (earnings minus all outgoings) you have before establishing how much they are prepared to let you borrow.

The same applies if, for example, you already have a mortgage but are looking to borrow more money with your current lender (or a new one if remortgaging). You will almost always be subject to another affordability assessment.

Typically, the higher your income and lower your debt-to-income ratio is, the more money you should be able to borrow - subject to certain caps on lending that many lenders have. Income multiples offer a general rule of thumb for the maximum loan you’re likely to qualify for.

Most lenders will cap lending at 3 - 4 times the amount of a joint income, some, may consider up to 5 times your income, and a handful will consider 6 times your income - under the right circumstances.

For those looking to release equity and borrow more against their property, secured loans are another consideration as these lenders can be more flexible and offer over up to 10 times your income, under the right circumstances.


Employment status and non-standard product transfers

Your employment status is another risk factor to consider. For example, those who are self-employed can be perceived as higher risk than those in “normal” full-time employment, as the latter can suggest a more stable form of income.

However, even if you’re employed full time, your contract type, length of time in your current role / company can impact eligibility, and some lenders do not take bonuses or commission into consideration when calculating net income.

For those that are self employed, again the length of time you’ve run your own business can be a significant factor to lenders.

Most lenders are happy to accept you if you have 3+ years’ worth of books as evidence of stable income, a few will accept if you have over one years’ worth, and a handful may accept you after as little as nine months of trading.

For more information about self-employed mortgage, consult our dedicated section on this topic.


Adverse credit issues and non-standard product transfers

When it comes to bad credit, it’s very much dependant on the borrower’s individual circumstances, the severity of the credit issues, how long it has been on their file, and the lender’s policy on adverse credit customers.

Specialist mortgage providers can offer a lifeline if any of the above applies to you and the advisors we work with can help you find the bad credit lender best positioned to offer you favourable rates, so make an enquiry today. You can also consult our dedicated page on bad credit mortgages for more information.


Speak to a product transfers expert today

The advisors we work with are experts when it comes to product transfers and know all the right questions to ask to make sure you get the right advice. They have a working relationship with all these providers and help you get the best deal.

For instance, they could tell you that ...

Lender
Halifax Product Transfer Can transfer before or after current deal ends
TSB Lloyds Product Transfer Offers transfer, but not online
Nationwide Product Transfer Inhouse consultants or use external broker
Santander Product Transfer Within 4 months of deal coming to an end
Accord Product Transfer When current deal has ended
Natwest Product Transfer Has inhouse advisors
Birmingham Midshires Product Transfer No fees
Aldermore Product Transfer No new credit or affordability check
Yorkshire Building Society Product Transfer Reserve new deal for 120 days
Barclays Product Transfer Exclusive rates for existing customers

If you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 26th January 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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