Product Transfer or Remortgage: What to Do When Your Deal Ends

What a product transfer is

A product transfer means staying where you are and switching to a new rate with the same lender. The loan does not move, the amount does not change and the security stays as it is.

Because nothing is really changing except the interest rate, the process is short. There is generally no new legal work, usually no new valuation, and in many cases no full affordability reassessment — lenders can offer a transfer without re-underwriting, since you are not borrowing more.

That last point is why a product transfer is often the practical answer where circumstances have changed for the worse: a drop in income, a recent job change, or a credit file that would not stand up to a fresh application.

What a full remortgage is

A remortgage moves the loan to a different lender. It is a new mortgage application, assessed against that lender's current criteria, with a fresh credit search, an income and affordability assessment, a valuation of the property and legal work to discharge the old security and register the new one.

It takes longer and involves more people, but it opens the whole market rather than one lender's range, and it is the route if you want to change the amount, the term, or the type of borrowing.

The differences that actually matter

• Affordability,A transfer often avoids a full reassessment. A remortgage always involves one, against criteria that may have tightened since you last applied.
• Valuation,A transfer usually relies on the lender's existing figure. A remortgage means a new valuation, which can come back lower than you expect.
• Legal work,A transfer normally needs none. A remortgage does, although many lenders offer a free basic legal service for straightforward cases.
• Choice of product,A transfer limits you to one lender's range. A remortgage compares the market.
• Speed,A transfer can complete in days. A remortgage is realistically a matter of weeks.
• Changing the borrowing,Additional borrowing, a term change or removing a borrower generally point towards a remortgage or a separate application.

Compare the total cost, not the rate

A lower rate with a large product fee can cost more over a two-year deal than a slightly higher rate with no fee, particularly on a smaller mortgage. The fee is a fixed cost; the rate saving scales with the balance. On a £90,000 mortgage a £1,499 fee is a great deal of ground to make up.

The comparison that matters is the total you will pay over the deal period — interest plus fees, and any cost of adding a fee to the loan, since a fee added to the balance attracts interest for the rest of the term.

This is also why the best-looking rate in a comparison table is frequently not the cheapest option for a particular borrower. It depends on the balance and the term remaining.

Early repayment charges

Most fixed deals carry an early repayment charge until the fixed period ends. Leaving early usually means paying it, which can run to thousands of pounds and will often outweigh any saving from moving.

The date the charge ends is the date to work back from. Many lenders will let you reserve a new rate some months ahead and start it when the current deal finishes, so you can secure a product without triggering a charge — but reservation windows and offer validity periods differ between lenders and change, so the specific dates need checking with your lender rather than assumed from a guide.

When to start

Starting several months before your deal ends is sensible for two reasons. It gives you time to complete a remortgage if that turns out to be the better route, and it means you are choosing rather than defaulting.

If you do nothing, the mortgage generally reverts to the lender's standard variable rate, which is usually higher than the deals available and can move at the lender's discretion. That is the outcome worth avoiding.

• Around six months before,Check your balance, your deal end date and your early repayment charge end date. Get a rough sense of what the property is worth now.
• Around four to five months before,Review the options — your lender's transfer range and the wider market — and compare total cost rather than headline rate.
• Around three months before,If remortgaging, submit the application so there is time for valuation and legal work. If transferring, reserve the rate if your lender allows it.
• The final month,Confirm everything is in place to start the day the current deal ends, so there is no gap on the standard variable rate.

Those timings are a general guide rather than a rule. Lenders differ on how far ahead they will let you reserve, and a case with anything unusual in it needs longer.

Documents you may be asked for

A product transfer often needs very little. A remortgage typically means recent payslips or, if you are self-employed, two or three years of accounts, SA302s and tax year overviews; recent bank statements; identification and proof of address; and details of any other credit commitments.

Having those together before you start removes most of the delay from the process.

Neither option is automatically better

A transfer is quick, low-friction and often right where the numbers are similar or where a fresh application would be difficult. A remortgage is worth the extra work where the wider market is materially better, or where you want to change something about the borrowing.

What we would do is compare both properly, including the fees, before recommending either. Sometimes the answer is to stay put. We will say so if it is.

Common questions