Mortgage Product Transfer
For most people, a mortgage represents the largest principal investment they’ll make during their lives. As such, securing a spot on the property ladder is a prospect which demands a tremendous amount of time, patience, and of course money.
Consequently, after your efforts pay off and you eventually obtain that dream home, it might seem convenient to completely forget about your specific mortgage deal. However, though not so frequently acknowledged, it’s a fact that your mortgage journey doesn’t end when you move into your new home.
Indeed, if you want to keep on top of your finances by having access to the most competitive mortgage products on the market, then it’s well worth being informed about the notion of a mortgage product transfer.
Rather than adding complications to your present arrangement, opting for a mortgage product transfer can provide you with substantial benefits. Albeit, there are some standout details you should be aware of before coming to a concrete decision. For this reason, we at The Mortgage Genie have put together this piece which contains all the salient information on product transfer mortgages. Throughout, we’ll cover:
What is a Mortgage Product Transfer?
Simply defined, a mortgage product transfer is a certain type of remortgage. In particular, one where you remortgage while remaining with your current mortgage lender. Mortgage product transfers imply that you switch from your existing deal to another with more favourable interest rates.
Commonly, people will choose to switch deals at the point when their current deal’s period is coming to an end. This is because you’ll be automatically placed on your lender’s standard variable rate (SVR) when your term is up.
In general, SVRs entail a relatively high rate, and therefore higher monthly repayments than if you were to switch to a fixed rate, tracker rate, or discounted rate mortgage. Depending on the financial context, utilising a mortgage product transfer can save you thousands in the long run. Though, what the right choice is for you depends entirely on your personal situation.
How do Mortgage Product Transfers Work?
If you qualify and are applying for a mortgage product transfer which doesn’t entail either borrowing more against your property or revising your mortgage term, then the process is rather straightforward.
Some homeowners are able to switch to a better deal with their current mortgage provider quite quickly, i.e., in just a few days. Reason being, that such mortgage product transfers without added complexities typically don’t involve measures like house valuations.
Although, with this in mind, it should be said that it’s important not to rush the procedure of a mortgage product transfer, and that you should have a mortgage broker at hand to evaluate all your options beforehand. After all, you could be missing out on lucrative agreements if you haven’t looked elsewhere.
Mortgage Product Transfers vs Remortgaging
Whenever you’re considering refinancing, it’s advisable that you weigh up every available option. For some, it may be best to stick with their current lender, but for others, another lender might be offering a product more suited to them and their individual circumstances. Likewise, there are both intrinsic advantages and disadvantages to mortgage product transfers, as compared to switching mortgage providers. These are as follows:
Benefits of Mortgage Product Transfers
Mortgage product transfer typically don’t come with credit checks
Less paperwork to fill out with mortgage product transfers
Full valuations aren’t usually necessary for mortgage product transfers
Fewer procedural stages with mortgage product transfers
You won’t have to pay early repayment charges if you stay with the same lender
Little to no legal work involved, meaning exemption from solicitor costs and extra fees
Disadvantages of Mortgage Product Transfers
Limited to one lender’s product range if you were to rule out a remortgage
Restricting your options makes it unlikely you’re getting the best deal on the market
Your current bank or lender will be bias and won’t be inclined to tell you about alternative remortgage routes with lower rates
If you want to borrow more money, then your lender could charge you at a different rate
Being declined for a mortgage product transfer can be costly if you don’t have a fallback
Could be harder to get approval if your initial circumstances have changed
Can I borrow more with a Mortgage Product Transfer?
When getting a mortgage product transfer, you have the choice of borrowing more money from your lender while using your property as security. This is what’s known as a further advance. Many choose to get a further advance in order to pay for home improvements like extensions, thereby increasing the total value of their house.
However, further advances can be less accessible, as opposed to straight mortgage product transfers. That is, whether you can borrow more when you transfer your mortgage is determined if your circumstances have since changed. This regards your employment status, how much equity you have in your property, the quality of your credit report, and the consistency of your mortgage repayment history.
Do Mortgage Product Transfers involve a Credit Check?
On the back of the last point, a mortgage product transfer will involve a credit if you want a further advance. Your current lender will need to comprehensively reassess your income and outgoings so that they can certify your affordability, given that it’s likely your monthly repayments will followingly increase.
A hard credit check facilitates this by allowing your lender to view your credit score, in addition to whether you’ve had recent financial issues such as bad credit, failures to meet payday loans, a court county judgement (CCJ), an IVA, or if you’ve claimed bankruptcy. The presence of these on your record will have a negative influence on the suitability of your application, leading your lender to reject you for a mortgage product transfer coupled with a further advance. Though, if they occurred over six years ago, then their impact will be lessened.
It’s significant that hard credit checks leave a mark on your report. Therefore, if you want to get an idea of your current eligibility before you apply for a mortgage product transfer, you can use our free credit check tool (free for 30 days, then £14.99 a month - cancel online any time). Using it will help you to discern any possible mistakes or fraudulent activity on your profile, so that you can deal with such problems effectively. The trial and subscription can be cancelled at any time.
Mortgage Product Transfer Advice
As we’ve shown, mortgage product transfers have the potential of benefitting you greatly, all while streamlining the entire refinancing process. Yet still, they can equally be disadvantageous in that remortgaging with another lender may be the better option for you.
The crux of the matter is that, whether a mortgage product transfer or instead remortgaging with another lender is right for you, wholly depends on your personal situation and individual circumstances. Since one’s mortgage generally symbolises their foremost investment, it pays to be shrewdly cautious. This means opening yourself up to mortgage product transfer advice from a mortgage broker with the experience needed to judge your position and the options before you.
We at The Mortgage Genie have an in-depth understanding on how to get a mortgage, and are dedicated to helping people secure loans of all types, including remortgages. We hope that this article has answered all of your questions and cleared up any distinctions surrounding product transfer mortgages.
Each day we help a growing number of people to achieve housing happiness by finding the remortgage product that’s suited to them, one which is tailored to their personal situation and financial circumstances, as well as by guiding them through every step of the way. If you require a team of expert mortgage brokers, then be sure to get in touch with us at 01915809890 and we’ll start working on the perfect remortgage solution for you. And why not get a quote today by using our remortgage calculator?