Remortgaging vs Product Transfer
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Leanne from CD Financial joins the Mortgage & Protection podcast to discuss the differences between a remortgage and a product transfer.
Is a product transfer an alternative to remortgaging?Product transfers are all about lenders deciding that they want to retain their clients rather than lose them to a different lender. Historically, people stayed with a lender for years and years. But as competition increased, people realised that they could move from lender to lender quite easily – so remortgaging became a big thing. Lenders have realised that this means people moving away from them, so they now work to retain clients by allowing you to do product transfers instead.
What are the differences between remortgaging and a product transfer?With a product transfer, you’re staying with the same lender and just changing your interest rate. For example, your two year fixed rate deal has come to an end, and now you’re looking at a five year fixed rate. Your term pretty much stays the same, the mortgage amount stays the same, you just change the rate with your current lender. But with a remortgage, you might be changing your rate, your term and the mortgage amount – so there is a little bit more flexibility. What you choose will depend on the circumstances and why you’re looking to change your mortgage deal.
Why might I need to remortgage?A lot of people will remortgage because they want to borrow more money, for home improvements, an extension, a conservatory, whatever they want to do. Or, your circumstances might have changed, so you may want to shorten the term of your mortgage and pay a little more each month. Another option is to get a deal where you have lower monthly repayments. Sometimes lenders don’t offer a competitive product transfer that’s right for you. So it might be that you can get a better deal by remortgaging to a different lender.
When might I need a product transfer?Product transfers are often more relevant when your circumstances have changed. Perhaps you’ve moved from employment to becoming self-employed, or maybe you have a blip on your credit history that means you can’t get a mortgage from another high street lender. A product transfer can work well in these situations.
How do I decide which option to choose?It’s often down to the specific situation you’re in. It’s important to do some research and maybe speak to a mortgage adviser for recommendations. Sometimes a product transfer is the best thing to do – it is usually simpler than a remortgage. In some situations a product transfer is your only option.
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