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 to streamline 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 several benefits, making it an appealing option for homeowners. Here are some key advantages of choosing to remortgage:
Lower interest rates:
If your home has increased in value since taking out your current mortgage, remortgage may help you secure lower interest rates. A new mortgage with reduced rates can lead to significant savings on interest payments over the loan term.
Greater flexibility:
Remortgaging allows you to find a mortgage that better suits your needs. You can explore options with features such as overpayments, underpayments, or the ability to switch between fixed and variable interest rates. This flexibility offers more control over your mortgage and aligns it with your financial plans.
Access to additional funds:
Remortgaging can enable you to borrow more money against the equity in your home. This could be useful for purposes such as funding home improvements, consolidating debts, or making other investments. Accessing this capital can help meet your financial goals.
Adjustable loan terms and repayment options:
When you remortgage, you may choose to extend or reduce the term of your loan. Extending the term can lower monthly payments, while a shorter term allows you to pay off the mortgage sooner. You may also switch from an interest-only mortgage to a repayment mortgage if this better suits your needs.
Wider range of mortgage products:
Remortgaging provides access to mortgage products beyond those offered by your current lender. By comparing deals from different providers, you can find products with competitive interest rates, favourable terms, and additional features that meet your requirements.
It is important to assess any costs, fees, and terms associated with remortgaging. Consider possible early repayment charges from your current lender. Evaluate your financial situation and future plans, and seek advice from a mortgage advisor to determine if remortgage is the right choice.
What are my options?
Switching mortgages has become increasingly popular, giving individuals greater flexibility in managing their home loans. Whether you choose a mortgage product transfer or remortgaging, there are various reasons to switch. These include consolidating debt, securing better interest rates, and improving financial stability.
If you are considering changing your mortgage but are unsure whether a product transfer or remortgage suits your needs, this guide is here to help.
When your current lender cannot offer the mortgage terms you need, remortgaging and switching to a new provider may be the better choice.
Lenders are still adjusting to the government’s recent policy changes. Some brokers predict that rates may decrease in the coming weeks if markets remain stable. We remain cautiously optimistic.
Remortgage or Product Transfer?
Speaking to a Connect Mortgage Adviser can help you make informed decisions during these uncertain times.
Contact a Connect Mortgage Adviser today to discuss your remortgage or product transfer options. Please find out how they can support your needs and help you achieve your financial goals.
Thank you for reading our “Remortgage or Product Transfer? | Differentiation Explained.” Stay “Connect“-ed for more updates soon!
