Remortgage or Product Transfer: Which Is Better?

The two options

A product transfer means taking a new rate from your current lender. No new legal work, no valuation in most cases, and usually no fresh affordability assessment. It can often be arranged in days.

A remortgage means moving your mortgage to a different lender. It is a full application with income checks, a credit search, a valuation and conveyancing, and it typically takes four to eight weeks.

When a product transfer is the better call

Usually where speed or acceptance is the constraint:

• Your circumstances have changed and you might not pass a new lender's affordability test, for instance after going self-employed or a drop in income
• Your credit file has picked up adverse since you took the mortgage
• Your fixed rate ends in weeks and you want certainty rather than a race
• Your loan is small, so the fees on a remortgage would outweigh the rate saving
• The property has an issue that a new valuer might question, such as cladding or non-standard construction

When remortgaging wins

Usually where there is money on the table:

• Your property has risen in value, so you drop into a better loan to value band
• You want to release equity for works, a deposit or debt consolidation
• You want to change the term, switch to interest only, or add or remove a borrower
• Your existing lender no longer prices competitively for your profile
• Your income has improved and you can now access sharper products

How to run the comparison properly

Compare total cost over the fixed period, not headline rate. That means the interest paid, plus arrangement, valuation, legal and broker fees, minus any cashback. A product transfer with no fees can beat a lower rate carrying 1,500 of costs on a smaller loan, and lose badly on a large one.

Start six months before your current deal ends. Most lenders will let you reserve a rate that far ahead, so you can secure one and still switch if better pricing appears before completion.