Product transfer mortgages

Once you've locked in a product transfer, it's tempting to sit back and let your broker or lender take care of things. DON'T.

While reserving a deal in advance protects you against rising interest rates, the same isn't true if a better mortgage deal comes along before the rate you've locked in takes effect.

So, it's crucial to keep an eye on mortgage rates to see if anything better emerges – right up until the final couple of weeks before your new deal starts. If this happens, you might be able to switch penalty-free and save money over the long-term.

How to check depends on whether you applied direct or used a broker:

• If you applied directly to your lender, you'll need to keep an eye out yourself whether better rates emerge in the meantime – so more legwork is required. 
  
  As well as periodically checking what rates rival lenders are offering, it's also sensible to check your lender doesn't launch a better rate before the one you've reserved kicks in. MSE Helen applied for a product transfer directly to her lender and, even though it hadn't yet started, she still wasn't informed when the same lender launched a more competitive rate. In other words, don't rely on the goodwill of your lender getting in touch.
  
  You can check and compare rates using our our Mortgage Best Buys tool.
  
  If you do find a better rate than the one you've reserved, your lender should let you switch to it (though make sure you ask at least 14 days before the reserved rate is set to start). This should be free provided you didn't pay anything upfront – see above for more info on this.

• If you applied through a broker, ask if they will automatically check for better rates, or if you need to request this. 
  
  Some big brokers – such as Habito*, Mortgage Advice Bureau* and Trinity Financial* – have told us that they automatically keep an eye out for better rates. If something better does come along, they'll be able to ditch your current locked-in deal and apply for a better one on your behalf (as long as you agree).
  
  Another big broker, L&C Mortgages*, guarantees to take this approach through its 'rate check' service, which in the past year has helped those who've locked in a deal early save £27 million by later switching them to a cheaper rate.
  
  But it's unlikely all brokers take the same approach, so make sure you ask. Some may only look for a better rate if you request this, for example, in which case you should keep a close eye on the top mortgage rates and, if something that looks better comes along, get in touch with your broker asking them to look into it for you.
  

It's worth noting that once the deal you've reserved has actually started, ditching it will almost certainly become trickier and more expensive (many lenders consider a deal to have started if there are 14 days or less before the new rate kicks in). That's because you will almost certainly have to pay an 'early repayment charge', which could cost you £1,000s (see more on how early repayment charges work).

For this reason, if you want to ditch a reserved deal then do so in good time and also avoid double booking. For example, if you reserve a new deal with your existing lender but later decide to remortgage to a different lender, remember to cancel your locked-in rate – otherwise you risk two new deals starting simultaneously (and paying an early repayment charge to cancel one).