Mortgage product transfer vs remortgaging

With a mortgage product transfer you’re able to change your current mortgage product to a new one with the same lender. You may choose to do this when your current mortgage product is coming to an end or if you’re looking to borrow more money using your house as security.

Some people do this if they’re looking to extend or refurbish their house. You may also wish to move from a Standard Variable Rate mortgage to fixed rate, tracker or discounted rate mortgage if interest rates have increased.

When transferring your mortgage product, you can look to take out more than your current mortgage balance or original loan. If this is the case, your lender will need to ensure the additional lending is affordable for you, and may take into consideration several eligibility factors before guaranteeing to lend you more money. These include but are not limited to:

• Employment status
• Income and expenditures
• Age
• The amount of equity you have in your home

Both a mortgage product transfer and remortgaging offer their own advantages and disadvantages. However, in comparison to remortgaging, a mortgage product transfer usually means there is:

• Less paperwork 
• Few to no fees
• No need for a new property valuation
• No legal work, so no solicitor costs

In addition, some lenders, including Newcastle Building Society, acknowledge loyalty of existing customers and may offer preferential rates to those looking to transfer to a new mortgage product.

Remortgaging means paying off your existing mortgage by taking out a new one with a different lender, using your home as security for the loan. Like mortgage product transfers, you can do this to replace your current mortgage and/or to take out more money against your property.

You can borrow the same amount as your existing mortgage or borrow an additional amount. Again, this may be useful if you are looking to improve or extend your home. If you are borrowing a significant amount, your lender may require evidence that you have or will use the money for the purpose you described.

Remortgaging is a big financial investment, so it’s important to spend time deciding if it’s the right option for you. Some of the benefits of choosing to remortgage may include:

• Lower interest rates if your home’s value has improved
• Finding a more flexible mortgage
• Having the facility to borrow more money
• Extending or reducing the term of your loan or the repayment type of your loan
• Not being limited to your existing lender’s mortgage products

Lending is subject to affordability checks. 

Although there are a lot of similarities between a mortgage product transfer and remortgaging, there are also important differences to consider before deciding which option is best for you.

If you are time sensitive, a mortgage product transfer may be more suitable as there is less paperwork and, since you aren’t changing lenders, the overall process is usually quicker.

Remortgaging may come with a lot of the fees that a standard new mortgage comes with (property valuation, solicitor fees, conveyancer fees etc.). These additional costs may not suit you or they may be more than you actually save and therefore remortgaging may not be the right decision for you.

However, if your current provider is unable to offer the mortgage you want, remortgaging and switching lenders may be the better option for you.