What Is a Product Transfer Mortgage?
If you have a mortgage in the UK, you may have heard the term “product transfer mortgage” or “mortgage rate switch”.
But what exactly does a product transfer mean? Could it reduce your mortgage payments or make your monthly costs more predictable?
A product transfer allows you to switch to a new mortgage deal with your current lender. It is often considered when an existing fixed, tracker or discounted mortgage deal is approaching its end.
In this guide, we explain:
- What a product transfer mortgage is
- How a mortgage product transfer works
- Which types of mortgages may be eligible
- The potential benefits and disadvantages
- How a product transfer compares with remortgaging
- What to check before accepting a new deal
What Is a Mortgage Product Transfer?
A product transfer, sometimes called a mortgage rate switch, is when you move from your current mortgage deal to another product offered by the same lender.
You do not move your mortgage to another bank or building society. Instead, your existing lender changes the interest rate product attached to your mortgage.
For example, you might:
- Switch from one fixed-rate mortgage to another
- Move from a tracker mortgage to a fixed rate
- Switch from your lender’s standard variable rate to a new fixed deal
- Choose another variable-rate mortgage offered by your lender
The main reasons homeowners consider a mortgage product transfer are to secure a more suitable interest rate, avoid moving onto the lender’s standard variable rate or gain more certainty over monthly repayments.
Key Features of a Product Transfer Mortgage
With a product transfer:
- You remain with your current mortgage lender.
- You normally keep the same mortgage balance.
- You can usually retain your existing mortgage term.
- The process is often quicker than changing lenders.
- A full mortgage application may not be required.
- A new property valuation is not normally needed for a straightforward transfer.
- Legal work is not usually required.
- Product fees or early repayment charges may apply.
- You can only choose from the products offered by your existing lender.
The exact process and eligibility requirements will depend on your mortgage provider and personal circumstances.
Why Do People Use Product Transfers?
Many homeowners consider a product transfer when their existing mortgage deal is coming to an end.
When a fixed-rate, tracker or discounted mortgage deal expires, the borrower will normally move onto the lender’s standard variable rate unless another deal is arranged.
A standard variable rate, commonly called an SVR, may be higher than the lender’s available fixed or tracker products. It can also change at the lender’s discretion, making future mortgage payments less predictable.
By arranging a product transfer, a borrower may be able to:
- Secure a new fixed mortgage rate
- Move onto a potentially cheaper variable rate
- Avoid automatically moving onto the standard variable rate
- Keep monthly mortgage payments more predictable
- Avoid some of the legal and valuation costs associated with remortgaging
- Complete the switch with less paperwork
- Remain with a lender they already know
- Keep the existing mortgage balance and term
However, staying with your current lender does not automatically mean you are receiving the most competitive mortgage deal available.
It remains important to compare the product transfer with remortgage options from other lenders.
Product Transfer vs Remortgage
A product transfer and a remortgage can both involve changing your mortgage deal, but they are not the same process.
| Feature | Product Transfer | Remortgage |
|---|---|---|
| Mortgage lender | You stay with your existing lender | You usually move to a different lender |
| Application process | Usually more streamlined | Normally requires a full mortgage application |
| Affordability assessment | May not be required for a straightforward rate switch | Usually required |
| Credit check | May not be required, depending on the lender and circumstances | Usually required |
| Property valuation | Usually not required | May be required |
| Legal work | Usually not required | Often required |
| Product choice | Limited to your current lender’s products | Access to deals from a wider range of lenders |
| Completion time | Often quicker | May take several weeks |
| Possible costs | Product fee and possible early repayment charge | Product, legal, valuation and broker fees may apply |
| Additional borrowing | May require further checks and a separate application | Can sometimes be included in the remortgage application |
A product transfer may provide a simpler route, while remortgaging may provide access to a wider range of lenders and mortgage rates.
The right option depends on the total cost of each deal, your financial circumstances and your future plans.
Which Types of Mortgages Can Be Transferred?
Product transfers may be available for several types of UK mortgages.
Eligibility will depend on the lender, the mortgage account and whether the borrower meets the lender’s requirements.
1. Residential Mortgages
A residential mortgage is used to finance a property that you live in as your main home.
If your residential fixed or variable mortgage deal is ending, your lender may offer a selection of new products.
A residential mortgage product transfer could allow you to secure a new rate without moving your mortgage to another provider.
2. Buy-to-Let Mortgages
A buy-to-let mortgage is designed for a property that is rented to tenants.
Landlords may be able to complete a buy-to-let product transfer with their existing lender. This can be useful when they want to secure a new rate without completing a full remortgage application.
However, buy-to-let product transfer rules vary between lenders. The lender may consider factors such as:
- The mortgage payment history
- The property’s estimated value
- The current loan-to-value ratio
- Whether the mortgage balance is changing
- The lender’s available landlord products
A product transfer should still be compared with buy-to-let remortgage options from other lenders.
3. Fixed-Rate Mortgages
A fixed-rate mortgage provides a set interest rate for an agreed period, such as two, three or five years.
When the fixed period ends, the mortgage will usually move onto the lender’s standard variable rate unless a new deal is arranged.
A fixed-rate product transfer allows the homeowner to move to another deal with the same lender.
This could be:
- Another two-year fixed mortgage
- A three-year fixed mortgage
- A five-year fixed mortgage
- A tracker or other variable-rate product
A new fixed-rate deal can provide certainty because the mortgage interest rate and monthly repayments remain fixed during the agreed period.
4. Variable-Rate Mortgages
Variable-rate mortgages include tracker, discounted and standard variable rate products.
If you already have a variable-rate mortgage, you may be able to use a product transfer to switch to:
- A fixed-rate mortgage
- A different tracker mortgage
- A discounted variable mortgage
- Another product available from your current lender
Moving to a fixed rate may provide greater payment certainty. Remaining on a variable deal may provide more flexibility, but payments can rise or fall when the interest rate changes.
How Does a Product Transfer Work?
The exact mortgage product transfer process varies between lenders, but it is often more straightforward than remortgaging to another provider.
When your current mortgage deal is approaching its end, your lender may contact you with details of the products available to existing customers.
You can review these options directly or speak with a mortgage adviser who can compare the lender’s product transfer deals with the wider mortgage market.
The process will usually involve the following steps.
Step 1: Check When Your Current Deal Ends
Review your mortgage statement or offer document to confirm:
- When your current rate ends
- Whether an early repayment charge applies
- When your lender will allow you to reserve a new rate
- What rate you will move onto if you take no action
Some lenders allow existing customers to reserve a new deal several months before the current product expires.
Step 2: Review the Available Product Transfer Rates
Your lender will provide a selection of mortgage deals based on your account and estimated loan-to-value ratio.
Compare:
- The interest rate
- Monthly repayments
- Product fees
- The initial deal period
- Early repayment charges
- Overpayment allowances
- Whether the mortgage is fixed or variable
- What happens when the new deal ends
Do not compare the interest rate alone. A mortgage with a lower rate but a high product fee may cost more overall.
Step 3: Compare the Wider Mortgage Market
Before accepting an existing lender mortgage deal, compare it with remortgage products from other lenders.
A product transfer may be easier, but another provider could potentially offer:
- A more competitive rate
- A lower product fee
- More flexible mortgage terms
- Better overpayment options
- A deal more suitable for your future plans
Remember to compare the total cost rather than focusing only on the advertised mortgage rate.
Step 4: Check the Fees and Charges
A product transfer does not always mean there are no costs.
Possible charges include:
- Mortgage product fees
- Arrangement fees
- Early repayment charges if you switch before your current deal ends
- Adviser or broker fees, where applicable
Legal fees and property valuation costs are not normally required for a straightforward product transfer, although lender processes can vary.
Step 5: Accept the New Mortgage Product
Once you select the new product, you will normally receive documentation explaining:
- The new mortgage interest rate
- Your monthly repayments
- The product start date
- The length of the initial deal
- Any fees
- Early repayment conditions
- Other important mortgage terms
Read the documents carefully before accepting the transfer.
Step 6: The New Rate Begins
The lender will apply the new product on the agreed date.
You will remain with the same lender, and your mortgage balance and remaining term will usually continue as before unless other changes have been agreed.
Practical Examples of Product Transfers
The following figures are illustrative examples only and do not represent current mortgage rates or guaranteed savings.
Example 1: Residential Mortgage, Fixed to Fixed
Anna bought her home using a two-year fixed-rate mortgage at 3.5%.
When the fixed deal ended, her mortgage moved onto her lender’s standard variable rate of 4.5%.
Anna reviewed the existing customer mortgage products offered by her lender and found a two-year fixed-rate deal at 2.8%.
She completed a product transfer and moved to the new fixed rate without changing mortgage providers. In this example, Anna reduced her monthly mortgage payment by £50.
Her actual saving would depend on factors including:
- The outstanding mortgage balance
- The remaining mortgage term
- The product fee
- The new interest rate
- Any early repayment charge
Example 2: Buy-to-Let Mortgage, Variable to Fixed
Michael owns a rental property with a tracker mortgage linked to the Bank of England base rate.
After interest rates increased, his monthly buy-to-let mortgage payments rose.
Michael contacted his existing lender and reviewed the available buy-to-let product transfer options. He selected a three-year fixed-rate mortgage, giving him greater certainty over his payments.
This helped Michael plan his rental property costs without the immediate risk of further payment increases during the fixed-rate period.
However, he also needed to consider:
- The product fee
- The new fixed interest rate
- Rental income
- Property management costs
- Tax considerations
- Early repayment charges
- What might happen when the fixed deal ends
What Are the Benefits of a Product Transfer Mortgage?
A product transfer can offer several potential advantages.
A Simpler Application Process
A straightforward rate switch may involve less paperwork than a full remortgage.
The lender already holds information about your mortgage account, property and payment history.
A Faster Mortgage Switch
Product transfers can often be completed more quickly than remortgaging because they may not require:
- A full mortgage application
- Conveyancing
- A new property valuation
- A transfer of funds between lenders
The timeframe will still depend on the lender and the circumstances of the mortgage.
No Change of Mortgage Provider
Some homeowners prefer to stay with their current lender because they are familiar with its systems, customer service and mortgage management process.
A product transfer allows them to change their mortgage rate without moving the loan elsewhere.
Potentially Lower Mortgage Payments
Moving from a standard variable rate or more expensive deal to a lower-rate product may reduce monthly mortgage payments.
Any potential saving should be calculated after including all fees and charges.
Greater Payment Certainty
Moving to a new fixed-rate product can make mortgage payments more predictable for the agreed fixed period.
This may help homeowners and landlords manage their monthly budgets.
Fewer Remortgaging Costs
A straightforward product transfer will not normally require new legal work or a full property valuation.
However, a product or arrangement fee may still apply.
A Possible Option for Borrowers Whose Circumstances Have Changed
Some borrowers may find it difficult to remortgage because their income, employment status, credit history or financial commitments have changed.
A straightforward product transfer that does not increase the mortgage balance may involve fewer checks than moving to another lender.
Eligibility and lender requirements will still apply.
What Are the Disadvantages of a Product Transfer?
Although a mortgage product transfer can be convenient, it is not automatically the best financial option.
Limited Mortgage Choice
You can only choose from the mortgage products offered by your existing lender.
A different lender may offer a more suitable rate, fee structure or mortgage feature.
The Rate May Not Be the Most Competitive
The simplest deal is not always the cheapest.
Before accepting a product transfer, compare it with mortgage options from other lenders.
Product Fees May Apply
Some product transfer mortgages include an arrangement or product fee.
The fee may be paid upfront or added to the mortgage balance. Adding the fee to the mortgage means interest may be charged on it.
Early Repayment Charges May Apply
If you switch before your current mortgage deal ends, your lender may charge an early repayment fee.
Check the timing carefully before completing the transfer.
Additional Changes May Require Further Checks
A basic product transfer normally involves changing the mortgage rate only.
If you also want to:
- Borrow more money
- Reduce the mortgage term
- Change the repayment method
- Remove or add a borrower
- Make another significant change
The lender may require a separate application, affordability assessment or credit check.
You Could Miss a Better Remortgage Deal
Accepting the first offer from your existing lender without comparing the wider market could mean missing a better mortgage option.
The lowest interest rate is not always the lowest-cost deal, so compare fees and total repayments as well.
How to Decide Whether a Product Transfer Is Right for You
If your current mortgage deal is approaching its end or your payments are increasing, a product transfer could provide a relatively simple way to secure a new mortgage rate.
Before accepting a deal, consider the following questions.
What Is the Total Cost?
Calculate the total cost over the initial mortgage deal period.
Include:
- Monthly repayments
- Product fees
- Adviser fees
- Early repayment charges
- Any other costs
How Does It Compare With Remortgaging?
Compare your lender’s product transfer with suitable deals from other mortgage providers.
A remortgage may involve more work, but it could provide a lower total cost or more suitable terms.
How Long Will You Stay in the Property?
A longer fixed-rate mortgage may not be suitable if you expect to move home soon.
Check whether the mortgage is portable and whether early repayment charges would apply if you sold the property.
Do You Need Flexibility?
Check the mortgage’s:
- Overpayment allowance
- Early repayment charges
- Portability
- Payment holiday conditions
- Options for making future changes
Are You Comfortable With Changing Payments?
A fixed-rate mortgage offers predictable payments during the fixed period.
A variable or tracker mortgage may rise or fall as interest rates change.
Have Your Circumstances Changed?
Changes to your income, credit history, employment or household expenses may influence whether a product transfer or remortgage is more suitable.
A mortgage adviser can review your circumstances and explain the available options.
Questions to Ask Before Accepting a Product Transfer
Before agreeing to switch your mortgage product, ask:
- When will the new mortgage rate start?
- Will I pay an early repayment charge?
- Is there a product or arrangement fee?
- Can the fee be added to the mortgage?
- What will my new monthly payment be?
- How much will I repay during the initial deal?
- Is the mortgage fixed, variable or tracker?
- How long will the new deal last?
- Can I make mortgage overpayments?
- What happens if I move home?
- Is the mortgage portable?
- What rate will apply when the new deal ends?
- Could another lender offer a better overall deal?
These questions can help you compare the real cost and flexibility of the mortgage.
Can You Complete a Product Transfer More Than Once?
Yes. Many borrowers complete several product transfers during the full term of their mortgage.
For example, a homeowner with a 25-year mortgage might switch to a new deal every two, three or five years when each initial mortgage product ends.
There is not normally a rule preventing multiple product transfers, but each switch will depend on:
- The lender’s criteria
- The products available at the time
- The mortgage account status
- Any early repayment charges
- The borrower’s requirements
Completing several transfers with the same lender may be convenient, but the wider mortgage market should still be considered each time.
Frequently Asked Questions About Product Transfer Mortgages
Is a Product Transfer the Same as Remortgaging?
No.
A product transfer means switching to another mortgage product with your existing lender.
Remortgaging normally means replacing your mortgage with a new mortgage from a different lender.
Does a Product Transfer Require a Credit Check?
A straightforward product transfer that does not increase the mortgage balance may not require a new credit check or full affordability assessment.
However, lenders have different procedures. Further checks may be required if you are borrowing more or changing other parts of the mortgage.
Does a Product Transfer Require a Property Valuation?
A new physical valuation is not normally required for a straightforward mortgage product transfer.
The lender may use an automated or estimated property value to determine the available loan-to-value products.
Can I Complete a Product Transfer Before My Fixed Rate Ends?
You may be able to reserve or arrange a new mortgage product before your existing deal expires.
However, starting the new deal early could result in an early repayment charge. The rules and switching windows vary between lenders.
Is a Product Transfer Always Cheaper Than Remortgaging?
No.
A product transfer may involve fewer fees and less paperwork, but another lender could offer a better rate or lower total cost.
Both options should be compared before making a decision.
How Long Does a Product Transfer Take?
A straightforward product transfer can often be completed more quickly than a remortgage.
The exact timeframe depends on the lender, the selected mortgage product and whether any additional changes are requested.
Summary
A product transfer mortgage allows you to switch to a new mortgage deal with your current lender without completing a full remortgage to another provider.
It can be a quicker and simpler way to:
- Secure a new fixed or variable mortgage rate
- Avoid automatically moving onto a standard variable rate
- Make monthly payments more predictable
- Reduce paperwork
- Avoid some legal and valuation costs
- Remain with your existing lender
Product transfers may be available for residential mortgages, buy-to-let mortgages, fixed-rate deals and variable-rate products.
However, the most convenient mortgage option is not always the most cost-effective. Compare the interest rate, fees, total repayments and mortgage features with suitable remortgage deals from other lenders.
Need Help Finding the Right Product Transfer Mortgage?
Understanding mortgage rates, product fees and lender conditions can be difficult, particularly when your current deal is approaching its end.
BSL Financials can help UK homeowners and landlords review their mortgage product transfer options and compare them with suitable remortgage deals.
Our mortgage advisers can explain the available options clearly, review the potential costs and help you understand which route may be appropriate for your circumstances.
Contact BSL Financials to arrange a mortgage review before your current deal ends.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Mortgage availability, rates and eligibility are subject to lender criteria and individual circumstances.
