Aside from applying for your original mortgage, remortgaging is probably one of the most significant financial decisions of your life. Depending on the choices you make, you could end up saving thousands or borrowing thousands more – it all comes down to the work you do upfront.
One way to simplify things (and get yourself off the standard variable rate, SVR) is to remortgage with the same lender. If you choose to do this, you probably won’t save as much money as you could, but it could certainly take a lot of the work and stress out of it.
Whichever way you choose to go, Think Plutus can help you through the process to maximise your chances of getting a good outcome.
What is a product transfer?
‘Product transfer’ is the term banks use when you remortgage with the same lender. A remortgage does not always involve swapping mortgage providers – it simply means you change the deal you are on. This can enable you to access new rates, terms, loan amounts or other features.
Why would you remortgage with the same lender?
The primary benefit of doing a product transfer is that it is simple.
When you remortgage to a product from a new lender, you are essentially reapplying for a mortgage. This means you have to go through the eligibility and affordability checks again, as well as having your property valued and having all the legal checks performed.
A product transfer takes all of that out of the equation. Your lender already knows the details, so they will simply present you with the rates you can switch your existing mortgage debt to. This option becomes available at the end of your introductory period – at this point, you would default to the standard variable rate (SVR).
Generally speaking, SVRs are not good. It is very rare for them to work out as the best rate available to you, and even if they are, the rate will change at some point. Wo when you reach the end of the introductory period and your lender sends you a range of rates to switch to, you will see how much you could save against the SVR. This makes product transfers look very tempting.
With your existing lender, all you need to do for a remortgage is agree to some new terms and the work is done. No additional checks, no broker fees and you will not need a solicitor to complete your remortgage.
What are the disadvantages of a remortgage with the same lender?
The lack of choice is the primary drawback of taking a product transfer, as you probably won’t access the best rates available. If you have some equity in your home, having kept up with your repayments (and you can afford the new repayments), you should be able to remortgage for home improvements.
Let’s go a little more in-depth into the reasons not to choose a product transfer:
You only get a handful of deals instead of thousands
Your lender will only offer you a few new deals you can switch to. These will be an improvement on the SVR, but there are thousands of alternatives on the market and it’s very likely another lender will offer a better rate.
You’ll lose out on a new property valuation and the potential for a new LTV
A remortgage to a new lender means a full valuation will be undertaken on your home. This is rarely done with a product transfer. If you think the value of your home may have increased since the time you took out your mortgage initially, it could be beneficial to have that valuation.
This is because whilst you have chipped away at your outstanding mortgage amount with your repayments, the property’s market value may have increased as well. If you remortgage with a new lender, you will be offered your up-to-date LTV (Loan to Value) calculated as a percentage of the property’s current value.
If your LTV is now lower, you will get access to superior mortgage rates.
You cannot get a more flexible mortgage
When you apply for your first mortgage to get a foot on the property ladder, paying it off may not be at the forefront of your thoughts. But when you reach the point where you can remortgage, you’ve been making repayments for a couple of years. At this point, you are probably more focused on paying off that debt.
It may be that this means you prioritise lower monthly repayments, but having a little flexibility to overpay where possible might also be appealing. Not all mortgages permit this without charging additional fees. If you remortgage to a new lender, you can factor this in to give yourself the option to pay off the mortgage faster. This won’t always be possible when you stay with the same lender.
Product transfer vs. porting – what’s the difference?
With product transfers and porting your mortgage, you stay with the same lender, but everything else is different.
You port your mortgage when you move house, and you are required to reapply for the same rates. A product transfer involves staying in the same home, and you do not need to reapply in order to get new rates.
How long does it take to remortgage with the same lender?
A product transfer happens very quickly. It can be completed within 24 hours, so it can be very helpful if you are entirely focused on avoiding the SVR.
Think Plutus can help you make the most suitable decision
As a whole-of-market mortgage broker, Think Plutus can find new deals from dozens of lenders to ensure you have access to the very best remortgage options. With our expert insight, you can identify whether or not a product transfer is the cheapest and best option. If not, we can take the stress out of remortgaging to another lender.
Remortgaging to avoid the SVR is always a wise move. The main consideration is to identify your priorities and base your decision-making on that. Think Plutus can help make everything clear for you and guide you to making a decision that works for you. Get in touch today and tell us about your situation.