Learn More About Product Transfers
15th Nov 2023
Doug Hall, Director of 3mc took some time out to chat about product transfers; what they are, the benefits of product transfers and how using a broker can make life that little bit easier and ensure you get a good rate.
What is a Product Transfer?
A mortgage product transfer, also known as a mortgage rate switch or a mortgage renewal, is a process that allows Buy to Let Landlords and Homeowners to change the terms of their existing mortgage without having to remortgage with a different lender. It typically involves switching from one mortgage product or interest rate to another offered by the same lender, usually at the end of a fixed-rate term or when a special deal is about to expire.
No Affordability Checks
One of the benefits of a product transfer, both in the buy to let or residential mortgage market, is you tend to find your existing lender does not carry out an affordability check. This means they don’t look at your income or the property income, unlike a new lender.
No Legal Fees
With a product transfer you will find there is no legal work involved and generally there is no valuation fee to be paid. Usually, the lender will provide an automated index valuation based on data that they have already and provide that to Broker or directly.
Do your Research!
Whether you go direct or use a broker, you need to assess both what your existing lender is prepared to offer you on a product transfer and then compare that against the market of other lenders.
If you are using a broker, they will do all the hard work for you and provide a cost analysis to see which is the most suitable product over the new product term you are considering, for example two or five years, and they will provide a total to pay analysis. As a result of that, they will then arrive at their conclusion of whether to do a product transfer or move you to a new lender.
The key with a product transfer is not to pause and think it will be better to wait until closer to the expiry of your existing product before considering your options. You should start to talk to your lender or your broker 6 months before the end of your current product.
Various lenders will consider and allow you to secure a rate, or a product up to 6 months before, but it’s also worthwhile noting that not all lenders do, and some may have a shorter window such as 3 months for example.
Secure your Rate Early
The mortgage market since September 2022, has seen volatile fixed rate pricing. If you are going for a fixed rate mortgage, then it’s important to secure your fixed rate as early as possible. You then typically have until two weeks before the end of your existing product to reapply for a better rate if they become available.
Keep Looking for Better Rates
If you are going through a broker, they will keep monitoring the rates and let you know if better deals are available to switch to. If you are dealing directly with your lender, then THEY WILL NOT do the same. It is up to you to keep contacting your lender to see if better rates are available and then apply online to switch each time you find a good rate.
On 23 June 2023, the Chancellor announced a new Mortgage Charter, following a meeting with the UK’s principal mortgage lenders and the Financial Conduct Authority (FCA). Read more about the Mortgage Charter, what it could mean for you and the lenders who have signed up to the Charter.
In summary, a mortgage product transfer is a convenient option for Buy to Let Landlords and Homeowners looking to change their mortgage terms without switching to a different lender. It can be a good choice for those who are satisfied with their current lender and want to maintain a certain level of stability in their mortgage payments. However, it’s important to compare the available options with what other lenders might offer to ensure that you are getting a good deal.
At 3mc, we have a team of expert advisers who can discuss all your mortgage requirements. If you would like to discuss your options, give the 3mc team a call on 0161 962 7800.
All calls are recorded for training and monitoring purposes. 3mc for intermediaries only.
*Your home may be repossessed if you do not keep up repayments on your mortgage. 3mc (UK) Ltd is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register https://register.fca.org.uk/s/ under reference 302992. Please note: The FCA do not regulate Business Buy to Let Mortgages.