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Are Product Transfer Mortgages a Good Idea?
When your fixed-rate mortgage is coming to an end, your lender will usually offer you a replacement deal, known as a product transfer mortgage. This is typically the easiest route forward, transferring you seamlessly from your existing mortgage product (the fixed-rate term) to a new one without the need for any affordability checks or application process.
At Clifton Private Finance, we’re keen that our customers get the best mortgage product possible, that takes into account multiple factors:
- The mortgage interest rate
- The length of the fixed-rate term
- The flexibility of the mortgage terms
- Additional fees and conditions
- Ease of application and acceptance
- Long term costs and savings
A product transfer mortgage may be the perfect option for you - or it may not be. To understand the difference, we looked at a real-world example to see how the numbers work out, and why speaking to us at Clifton Private Finance will ensure you’ve made the right choice - and could save you thousands!
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Understanding a Product Transfer Mortgage
Though we talk about mortgages as long-term products, such as a ’25-year mortgage’, the truth is that mortgages are usually a sequence of shorter loans that combine to make one long term.
This process can be time-consuming and difficult though - a full mortgage reassessment, known as a remortgage typically involves finishing with your current lender and stepping back into the wider landscape of mortgage lending and making a brand new application for a new mortgage.
For anyone who experienced stress and difficulty the first time around, the idea of going through a remortgage process every few years is hardly desirable.
Product Transfer vs. Remortgage: The Dilemma
Enter the product transfer mortgage.
Rather than a full remortgage, a product transfer mortgage provides the simplest, hassle-free alternative. You stay with your current lender, who waives any need for a full application, credit check, and affordability stress testing, and simply gives you a selection of new offers to pick from.
You choose the one that best suits you, click the button and job done - another few years where you can just get on with life and not worry about the mortgage.
How do you balance it? When is it right to accept a product transfer mortgage and when should you look elsewhere? This is where a specialist broker, like us at Clifton Private Finance can help.
Alex’s Product Transfer Mortgage Story
Alex bought his first home in 2023. He took out a 90% LTV (loan-to-value) mortgage to pay for the £300,000 property. The mortgage was for £270,000 and was on a 2-year fixed rate of 5.79%.
It’s a reasonable rate - better than he had been on - bringing him a slight reduction in his monthly mortgage payments. He’s happy with the idea of staying with his lender for another two years and was ready to click ‘accept’.
But he decided to check with Clifton Private Finance first, just to see what alternatives were out there.
Our team evaluated Alex’s situation in depth. He’d built up equity in his property through the payments he’d made over the two years, as well as thanks to a slight increase in market value of the house. His new LTV would be 82%, giving him a little more of a competitive edge than he’d had originally.
There were some considerations.
- Alex would need to complete a full remortgage application that included an in-depth affordability check and credit report (though we were able to do this on his behalf).
- The fees for the new mortgage came to £999. This would be folded into the mortgage and not make any initial impact on Alex’s bank account, but still must be considered when thinking about the savings.
- The paperwork and application would be more time-consuming than simply pressing an ‘accept’ button - but by working with our mortgage team, this would be a lot smoother.
Alex and the team looked at the calculations for the monthly payments:
- Old fixed-rate deal: £1,704/month
- Product transfer mortgage: £1,696/month
- Clifton Private Finance remortgage offer: £1,567/month
Alex chose to move forward with the Clifton Private Finance arranged remortgage offer. The paperwork took a little time but the result was well worth it.
Recent Mortgage Case Studies
Evaluating Product Transfer Mortgages with Clifton Private Finance
There’s no one-size-fits-all when it comes to mortgages. Evaluating all the offers you have and making a decision that weighs multiple considerations is important - this is why speaking to a professional and experienced mortgage broker is essential.
If you are reaching the end of your current mortgage term and either have a product transfer mortgage offer or are expecting one soon, call the specialist mortgage team at Clifton Private Finance. We will look at your situation in full and help you reach a decision that is confident and informed - whether that’s to go with the lender’s product transfer mortgage, or to opt for a full remortgage with a new lender. Contact us today.
