Despite the mortgage market calming in recent months, the volume of new mortgage lending has decreased since the start of the year. As a result, many lenders have been more focused on prioritising customer retention through “product transfers”.
A product transfer is essentially when you accept a new mortgage deal with your existing lender, rather than switching to a different bank or building society.
According to FTAdviser, mortgage brokers have recently noticed a rise in the popularity of these product transfers as lenders price them more competitively in an attempt to retain customers.
If your mortgage deal is coming to an end, your existing lender may have offered you a deal to stay with them. However, it’s always worth shopping around to see if there are better options available which could save you money over the next few years.
Continue reading to discover the difference between the two options, and why you may want to reconsider before choosing a product transfer from your existing lender.
A product transfer is when you source a new deal with your current lender
A product transfer is simply when you switch from your current mortgage deal to a new one with your existing lender.
You can normally do this when your current deal ends, or if you wish to borrow more money on your existing mortgage. Though, it’s important to know that you may face early repayment charges if your existing deal hasn’t expired.
One of the caveats about a product transfer is that you must remain with your existing lender. Since you’ll need to rely on the deals offered by your current lender and won’t be able to scan the wider market for a competitive deal, you may find your options limited overall.
The deals you do have access to could be relatively uncompetitive compared to those offered by other lenders.
Of course, there are some benefits of a product transfer. For instance, the process tends to be far quicker when compared to a remortgage, as you generally won’t have to go through an underwriting process. The deals you are offered may also be competitive.
However, just because a product transfer may be easier, doesn’t mean it is necessarily the best option for you. While product transfers do have their place, there are potentially much better deals available out there that could save you hundreds, or even thousands, of pounds on your mortgage.
As such, the better option could be to remortgage instead. Continue reading to find out how it could potentially save you a considerable sum of money.
Remortgaging is when you find another deal with a new lender
When you remortgage, you switch your mortgage from your current provider to a new bank or building society.
Perhaps the most obvious benefit is that you can shop around and find the most appropriate deal in the marketplace, rather than taking a product offered by your existing lender – which may not be the cheapest, or most appropriate, for you.
You could also borrow extra money to finance a renovation by remortgaging, such as a new kitchen or bathroom, or even use it to pay off other debts with typically uncompetitive interest rates, such as a credit card.
Always remember to consider any fees – such as arrangement, valuation, and legal fees – before you decide to remortgage. Many lenders will meet some of the costs involved in a remortgage.
If you’re still unsure whether remortgaging is right for you, it may be prudent to speak with an expert. We can review your mortgage deal many months before it expires to give you a clear understanding of the rates that are available to you.
Get in touch
While the rates offered by product transfers may look competitive now, it’s important to enlist the help of an expert to closely examine your financial situation before you make a decision.
We can scour the market on your behalf to help you find the right deal for your needs.
To discuss this more, please email enquire@london-money.co.uk or call (0207) 808 4120.
Please note
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it. Think carefully before securing other debts against your home.