Personal and income circumstances can change during a mortgage fixed term, and so can the mortgage market, making remortgaging a significant challenge for borrowers.
Product transfers, sometimes known as rate switches, are another option available for borrowers. How do you secure a rate switch, and is it always the best thing to do?
What is a product transfer?
A product transfer is where you stay with your current lender and move onto a more competitive rate on a like-for-like basis (meaning there’s no additional borrowing or significant changes to your original mortgage application). Like a remortgage, a product transfer helps you avoid the expensive Standard Variable Rates (SVRs) you revert onto at the end of your fixed mortgage term.
How do you secure a product transfer?
The product transfer process is so quick and easy that lenders can turn it around in as little as one day. Our brokers need minimal information from you to access your account with your current lender, where we submit an enquiry. The lender can then do an automated property valuation in just seconds from receiving this enquiry, which gives them the information they need about the property and Loan to Value (LTV). With these details, your lender will be able to show you the products you could be eligible for; it’s really that straightforward.
Do all lenders offer product transfers?
No, not all lenders offer a product transfer. Speak to your mortgage broker to determine whether this is an option with your lender.
What are the benefits of a product transfer?
Choosing a product transfer can be beneficial.
- Most product transfers are not subject to any additional underwriting, which can speed up the overall application process.
- It can save borrowers a lot of money by transferring products before reverting onto your lender’s standard variable rate.
- The rate switch process is also time-efficient, good for last-minute borrowers who haven’t had the time to go through the remortgage process or those already on an SVR.
It's also worth noting that until your application completes, should a reduced product transfer deal become available, most lenders will be able to consider cancelling the pending product transfer application and allow you to switch to the new option. This should gives landlords some reassurance when going through this mortgage process.
What are the drawbacks of a product transfer?
There are some drawbacks to a product transfer.
- By sticking to the same lender, you may miss out on more competitive rates available on the market. Just as with your insurance, it is worth shopping around to ensure you get the best deal.
- If you want to release equity from your property for property investment or refurbishment, a product transfer will not be for you. As the lender will not complete any more affordability checks etc., you cannot capital raise.
Overall, product transfers can be a fantastic solution to save you money. Furthermore, with current lender affordability checks causing many borrowers issues when it comes to their remortgage, this may be the best option for you.
What next?
For free, we will compare the available product transfer and remortgage deals on the market that you are eligible for to find you the best option. Get in touch today to see what mortgage rates you could access by calling 0345 345 6788 or submitting an enquiry here.
