Remortgage or Product Transfer?
Securing a mortgage can be an extensive financial commitment. Even with all your hard work to find the best deal, it may sometimes mean that you have selected the optimal option for yourself; initially, what might have been advantageous could no longer provide favourable results. If you’re caught in this unfavourable predicament, it’s time to ponder remortgaging as a possibility – doing so could save you more money and create more fiscal freedom! But, 
for a successful remortgaging journey, there must be an in-depth comprehension of the entire process. This article will provide all you need about the remortgaging procedure and essential guidance on when and how to begin your adventure.
What does it cost to remortgage away from your existing lender?
It is important to note that not all lenders offer their existing customers lower rates than those they offer new customers. This is often a good enough reason for mortgagors to take their mortgage elsewhere. But is this the right thing to do?
What are the costs?
Remortgage or Product Transfer? This may or may not be a cost-effective decision. It’s advisable to speak with one of Connect’s mortgage brokers to find out if this is a financially viable option or if it’s cheaper to remain with your existing lender and go down the ‘product transfer’ route.
Lenders with a healthy retention rate are likelier to appreciate the benefits of incentivising their customers to remain loyal. After all, it can cost the lender more to seek out new business than capitalising on what’s already in place.
That said, Connect’s specialist advisers can help with the product transfer or the remortgage process. They understand that you may not have the time to arrange a product switch and would greatly benefit from their expert advice.
If your fixed rate ends in approximately 90 – 180 days, it’s worth checking your lender’s policy on product transfers. Your lender can secure a rate until your existing rate ends. At that point, your loan will automatically switch to the new rate.
Product Transfers
Product transfers are more convenient than remortgages because the lender may not require supporting documentation. This is a massive advantage if you’re time sensitive. Lenders who do not offer attractive retention rates will naturally lose out to their competitors. If your current lender hasn’t done enough to retain your business, you can begin the remortgage process months before your fixed rate ends and get it to the ‘offer’ stage. Your Connect broker will give the new lender the date you prefer to complete – this will align with the final day of your current tie-in period, meaning you will avoid paying any penalties for settling early.
Reasons you may decide to remortgage:
- The rate with your current lender is too high
- You can fix for longer this time, and your existing lender only offers a maximum 5-year fixed-term product.
- Perhaps you haven’t had an incredible customer journey with your current lender.
- You may want to borrow more, and your existing lender doesn’t offer further advances or deems additional borrowing unaffordable.
- You’d like to consolidate your other debt, and your existing lender doesn’t extend up to the loan-to-value you need
- You may wish to reduce the overall mortgage term, and your current lender deems this unaffordable – different lenders will accept various types of income. They may also use multiple stress tests’ to calculate your affordability.
- Change in circumstances – you may wish to add someone onto the mortgage with a more complex income type, e.g. self-employed with only 1-year accounts
- .You may need more flexible mortgage terms – perhaps you plan to sell quickly and want a lifetime tracker rate with no early repayment charges.
Remortgaging: A Quick Summary
Knowing all available options is essential if you’ve been with your lender for some time and want to save money. Product transfers can be a fast and easy way of finding a better deal without the stress of changing lenders – but remortgage could be the more affordable option. Your Connect mortgage broker will be able to compare your current rate against what else is available in the market and make a recommendation that best suits you.
It’s essential to get professional advice when making such an important decision. A Connect mortgage broker can provide personalised guidance throughout the remortgaging journey, saving you time and money.
Remortgaging may seem daunting; however, it’s worth remembering that the process does not have to be complicated or expensive. With guidance from Connect’s experienced brokers, you can leverage your current situation to secure a better rate and save money in the long run.
Benefits of a mortgage product transfer
Opting for a mortgage product transfer can offer several benefits compared to remortgaging. Here are some advantages commonly associated with a mortgage product transfer:
Reduced paperwork: Switching your mortgage through a product transfer typically involves less paperwork and documentation than remortgaging. Since you are staying with your existing lender, they may require minimal information, streamlining the process.
- Lower fees: In many cases, mortgage product transfers have lower or no fees. While remortgaging may involve various charges such as legal, property valuation, and arrangement fees, a product transfer often eliminates or reduces these costs, making it a more cost-effective option.
- No property valuation required: Unlike remortgaging, where a new property valuation may be necessary, a mortgage product transfer typically doesn’t require a valuation. This can save you time, effort, and potential costs for obtaining a new valuation report.
- No legal work or solicitor costs: When you choose a mortgage product transfer, there is no need for extensive legal work or solicitor involvement. This eliminates the associated legal fees, making the process simpler and more cost-effective.
- Potential preferential rates: Some lenders, including Newcastle Building Society and others, value customer loyalty and offer preferential rates to existing customers who choose to transfer to a new mortgage product. This can result in more favourable interest rates and potentially save you money over the long term.
It’s important to note that while a mortgage product transfer can offer these advantages, it may not always be the most suitable option for everyone. Consider your circumstances, financial goals, and the terms your lender offers before deciding.
Benefits of a remortgage
Remortgaging offers a range of benefits that make it an attractive option for homeowners. Here are some advantages of choosing to remortgage:
- Lower interest rates: If the value of your home has increased since you obtained your current mortgage, remortgage can allow you to take advantage of lower interest rates. By securing a new mortgage with a lower interest rate, you can save a significant amount of money on interest payments over the life of the loan.
- Increased flexibility: Remortgaging allows you to find a mortgage that better suits your needs. You can explore different mortgage products and lenders to find options with more flexible features such as overpayments, underpayments, or the ability to switch between fixed and variable interest rates. This flexibility can provide greater control over your mortgage and better align it with your financial goals.
- Access to additional funds: Remortgaging can allow you to borrow more money against the equity in your home. This can be useful for various purposes, such as funding home improvements, consolidating debts, or investing in other ventures. By unlocking the equity in your property, you can access the capital you need for your financial aspirations.
- Loan term and repayment options: When you remortgage, you have the option to extend or reduce the term of your loan. If you want to lower your monthly payments, extending the term can spread the repayments over a longer period. Conversely, you can choose a shorter term if you wish to pay off your mortgage sooner. Additionally, remortgaging may allow you to change the repayment type, such as switching from an interest-only mortgage to a repayment mortgage.
- Wider choice of mortgage products: Remortgaging allows you to explore mortgage products beyond what your existing lender offers. By researching and comparing mortgage deals from different lenders, you can find options that better suit your financial requirements, including competitive interest rates, favourable terms, and additional features.
It’s important to carefully evaluate the potential costs, fees, and terms associated with remortgaging and consider any early repayment charges from your current lender. Assess your financial situation and future goals, and consult a mortgage advisor to determine if a remortgage is right.
What are my options?
Remortgage or Product Transfer? Switching mortgages has gained significant popularity, offering individuals greater flexibility with their most substantial financial commitment to their home mortgage. Whether through a mortgage product transfer or remortgaging, people have a variety of reasons for opting to switch mortgages, ranging from consolidating debt to seeking improved interest rates and more.
If you’re contemplating a mortgage change but are still determining which route, mortgage product transfer or remortgaging best suits your needs, this guide aims to clarify.
If your current provider cannot offer the mortgage you want, remortgaging and switching lenders may be your better option.
Lenders will still need time to respond to the government’s recent U-turn. However, some brokers have predicted that lenders will trim their rates over the coming weeks, assuming the markets remain relatively stable. We can but hope!
Remortgage or Product Transfer? Talking your options through with a Connect Mortgage Adviser is a good idea during these unprecedented times of uncertainty. 
Speak to a Connect Mortgage adviser today to answer questions on the title; Remortgage or Product Transfer? And see how they can help you.
