Product transfer mortgages
What you need to know about sticking with your existing lender but switching to a new mortgage deal
Getting a new mortgage deal doesn't have to mean switching lender. If you prefer, you can get a new deal from your current lender – known as a 'product transfer'. In fact, many homeowners are finding this route quicker, easier and cheaper right now. Check if a product transfer could save you £1,000s by following our four simple steps.
Step 1: Weigh up the pros and cons of a product transfer
If your current mortgage deal is within six months of ending (and you aren't planning on moving house), it's time to act.
Do nothing and you'll roll on to your lender's standard variable rate (SVR). With typical SVRs currently sitting around 8%, this is likely to cost you £100s or even £1,000s more in interest each month than your current deal.
To avoid this, you've got two options:
- Stick with your existing lender but switch your deal – this is called a 'product transfer', and is the focus of this guide.
- Change your lender and switch deal – this is called 'remortgaging' (for more on this, see our Should you remortgage? guide).
The majority of homeowners choose the first option – a trend that's only grown as interest rates have risen and mortgage affordability has tightened. In 2022, there were six times as many product transfers as remortgages (1.27 million compared with 190,000). And product transfers were up four times on the previous year.
Despite this, whether a product transfer is right for you will depend on several factors – here are the pros and cons to weigh up:
Product transfer PROS
- Interest rates can be highly competitive. In fact, some lenders offer better rates to existing borrowers than to new ones.
- Fewer fees (compared to a remortgage). With a product transfer you'll normally have to pay an arrangement fee, but that's often it. Legal fees are uncommon and you're unlikely to be charged a valuation fee. Plus there'll be no exit fee, which is common with a remortgage (usually £150-£200).
- Less paperwork. The process can be relatively straightforward, provided you're not borrowing more money or changing any of the other terms of your mortgage (such as the length of the term).
- No affordability check. Lenders will not normally carry out an affordability check if you're borrowing the same amount for the same mortgage term – a boon if you'd struggle to be accepted elsewhere. This also means no mark on your credit file.
- Quick and easy to apply. Applying for a product transfer deal can usually be done easily yourself, either online or over the phone. Alternatively, a mortgage broker can arrange one on your behalf. Acceptance is often quick – sometimes in days or even hours.
Product transfer CONS
- Limited choice. Your lender will likely only have a small number of product transfer deals for you to choose from, so there may not be anything meeting your requirements.
- No guarantee of getting the best rate. Just because you're an existing customer doesn't mean your lender has to offer you a leading rate. You might get a better rate with a rival lender.
- Extra checks if changing your mortgage term. If you request a change to the length of your mortgage term as part of the product transfer process, you might have to undergo an affordability check. This is more likely to be the case if you're shortening the term.
- Can't add or remove names from mortgage. If you've got divorced, for example.
- Can't move house. If your mortgage deal is ending and you're moving home, it's not a product transfer or a remortgage that you need, but a 'home-mover' mortgage – compare the top deals in our Mortgage best buys tool.
- Might not be able borrow more. If you want to borrow more money (known as a 'further advance') on your existing property, you'll need to undergo an affordability check. And you might find that the interest rate on the extra borrowing is different to that on your main mortgage. So, it's best to discuss your options with a mortgage broker.
Some inspiration: 'I'm saving £53/month for the next two years'
Here are some successes from people who've recently opted for a product transfer:
Just wanted to say after reading your newsletter, I managed to get a product transfer deal with my existing lender, saving £53 a month for the next two years [a total saving of £1,272]. This is a great saving for me, with virtually no effort. Thank you so much.
Susan, via email.
My fixed-rate was due to end in March, but on your advice I found out I could contact my lender up to three months before the expiry date to secure a new deal. I did this in January, and managed to get a five-year fixed-rate mortgage at less than 2%.
Alice, via email.
I read your weekly email on the train to work, one day after HSBC messaged to say we could start looking at new rates (as we were within 90 days of our existing deal ending). We rang HSBC in the evening and selected a new rate, all confirmed by 9pm. Woke up in the morning to find interest rates had changed already – so a HUGE thank you.
Olivia, via email.
Step 2: Check how product transfer rates compare to remortgage rates
If a product transfer sounds like it might be for you, the next step is to start comparing interest rates.
It used to be that interest rates on product transfer mortgages weren't particularly good – so you were almost always better off switching lender if you wanted a cheap new deal.
But since interest rates on mortgages started increasing in 2022, product transfers have become far more competitive. With lenders worried that fewer new borrowers will be able to pass their affordability tests, they're increased their efforts to retain existing customers.
As a result, rates being offered to existing borrowers are often as good, if not better, than those available to new borrowers. See the table below as an example:
|60% LTV||75% LTV||90% LTV|
|Barclays||5.08%||5.28%||5.36%||5.39%||5.97% (1)||5.97% (1)|
How to compare product transfer and remortgage deals
Here's how to compare product transfer and remortgage deals:
- Find out your current lender's best deals – in particular the product transfer rates it's offering. You can see what might be available to you via the handy product transfer checker in our Mortgage best buys tool.
- Check out the deals you could get from other lenders. You can do this by selecting the 'remortgage' dropdown in our Mortgage best buys tool.
- Contact a mortgage broker to make sure you haven't missed any deals. Some brokers have access to exclusive deals, plus they can advise you on which products have the features you're looking for and which lenders are more likely to accept you. For many, speaking to a broker is strongly advised. See our top broker picks.
Once you know how the best deals from your current lender compare with those of other lenders, you'll be in a better position to decide which is better for you. We've a host of mortgage calculators to help.
Important: Even if you can find a better rate with a different lender, in some situations it might still make sense to product transfer instead... For example, if the product transfer rate's only marginally worse, and you don't want to go through the rigmarole of a full remortgage (which will likely include more paperwork and an affordability check), and/or if better rate comes with expensive product fees. Take the following scenario:
Let's imagine your current mortgage deal is expiring and you've got £100,000 left to repay. You want a new two-year fix and are trying to choose between:
- 4.5% fix with a £1,000 fee from your current lender.
- 4.1% fix with a £2,000 fee from a new lender.
Ignoring fees initially, on rate alone the 4.1% deal from a new lender would indeed cost you around £23 less a month (or £550 over two years). But when you factor in fees – and assuming you paid these up front – the hefty £2,000 fee means the 4.1% deal would actually work out £450 more expensive than the 4.5% deal over two years.
Got two mortgages to compare? Our calculator can help you crunch the numbers.
Step 3: Secure a product transfer up to six months before your current deal's due to end
If you've decided against remortgaging with a new lender in favour of a product transfer with your current lender, your next step is to secure the new rate.
Many lenders let you do this at least three months before your existing deal's due to end and, increasingly, you can do it six months in advance.
That's because allowing a lock-in period of 'up to six months' is specified as part of the Mortgage Charter, which the vast majority of lenders have committed to (see if your lender's one of them).
How do I secure a product transfer?
Locking in a product transfer should be straightforward, your choices being:
- Do it yourself. With many lenders, it can be done with the click of a few buttons online. Others will have to do it over the phone. Either way, the process is often simple.
- Use a broker. If you'd prefer, a broker can check if a product transfer is the best option for you and, if so, lock in the rate on your behalf. Many of our top brokers are free to use.
Be sure to ask your lender, or broker if you're using one, exactly what fees will be charged and what, if any penalty, will apply if you change your mind and decide to ditch the new rate before it kicks in.
While product transfers usually don't come with as many fees as remortgages, you'll often still have to pay an arrangement fee. But, importantly, you should be able to choose when to pay this:
- Paying the fee(s) upfront. If you have the cash to do this, it might seem like a good idea to ensure you avoid paying any interest on the fees. HOWEVER, the crucial drawback is that, if a better rate comes up after you've paid the fee (but before the rate you've reserved kicks in), you likely won't be able to get your money back if you decide to switch to the better rate. For that reason, the better and more flexible option for most is...
- Choosing to add the fee(s) to your mortgage balance. By reserving – but not paying for – your new product transfer in advance, you're protected if rates elsewhere go up before your new rate kicks in. But you should also have the option to ditch the rate penalty-free if rates elsewhere drop and you decide to switch (see Step 4).
The trade-off is that adding the fee(s) to your mortgage balance will slightly increase your monthly repayments, as you'll be paying off the fee plus interest. Use our Mortgage Calculator to see the impact of adding the fees to your mortgage.
If you're keen to avoid this, but want the flexibility you get from not paying for your product transfer upfront, a halfway house option is to add the fee(s) to your mortgage, but then make an overpayment on your new mortgage as soon as it starts to pay it off. To do this, though, you'll first need to check with your lender (or broker) that your new deal allows overpayments. For more on overpayments, see Should I overpay my mortgage?.
Step 4: Keep an eye out for any better mortgage deals
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 recently 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 (unless there's not much time before your locked-in rate is due to start – typically two, or three, weeks). 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).
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. 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).
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